---
title: 'Did Elon Musk Just Scam Shareholders? The Dirty SpaceX Tesla Loophole'
source: 'https://youtube.com/watch?v=qmthOcInLZc'
video_id: 'qmthOcInLZc'
date: 2026-08-13
duration_sec: 637
---

# Did Elon Musk Just Scam Shareholders? The Dirty SpaceX Tesla Loophole

> Source: [Did Elon Musk Just Scam Shareholders? The Dirty SpaceX Tesla Loophole](https://youtube.com/watch?v=qmthOcInLZc)

## Summary

This video analyzes the 2025 Tesla CEO Performance Award Agreement, focusing on a specific clause that waives all operational milestones in the event of a merger or change in control. The speaker, Kevin Paffrath, explains how this loophole could allow Elon Musk to unlock his first stock compensation tranche based solely on market cap, potentially at a $2 trillion acquisition price, regardless of whether Tesla meets its operational targets like FSD subscriptions or robotaxi deployments.

### Key Points

- **Merger Waives Operational Milestones** [00:15] — The stock compensation plan includes a clause that disregards all operational milestones in the event of a merger or change in control, leaving only market cap as the determining factor for Elon Musk's pay.
- **Current Milestone Progress** [00:47] — Tesla is at 1.48 million active FSD subscriptions (14% of the 10 million target), 9.7 million cumulative vehicle deliveries (almost halfway to 20 million), 20 unsupervised robotaxis (vs. 1 million target), and zero Optimus robots delivered for commercial purposes.
- **Market Cap and Operational Milestones** [02:37] — The first tranche requires a $2 trillion market cap (30-day weighted average) plus one of 12 operational milestones, which include FSD subscriptions, robotaxi deliveries, Optimus robots, or adjusted EBITDA increments.
- **The Loophole: Market Cap Only** [03:42] — In the event of a merger, all operational milestones are stricken, and only the market cap section matters. Since SpaceX is controlled by Elon, he can effectively decide the acquisition price and thus his compensation.
- **Potential $2 Trillion Acquisition** [05:38] — A $2 trillion acquisition price for Tesla (about $506 per share, a 53% premium) would unlock the first tranche immediately, granting Elon about $17.9 billion in stock options before tax.
- **The Real Play: Tesla Stake Value** [07:05] — The $17.9 billion is a rounding error compared to Elon's 12.7% stake in Tesla, which would be worth about $250 billion at a $2 trillion valuation. The higher the acquisition price, the more his Tesla ownership is worth, which translates into more SpaceX stock.
- **Brilliant but Shystery** [08:03] — The speaker calls this 'brilliant optionality' but 'evil' because it's not what shareholders intended to vote on. However, shareholders might not complain if they get a premium for their shares.
- **Risk to SpaceX Shareholders** [08:29] — The potential losers are other SpaceX shareholders, as paying a fat premium for Tesla could dilute their ownership. The speaker notes he is one of those shareholders.
- **Perverse Incentives** [09:11] — The clause perverses incentives: Elon could get paid a premium for Tesla even if it's not hitting operational milestones, and then use the inflated Tesla valuation to increase his SpaceX ownership.

### Conclusion

The video concludes that the merger clause in Tesla's stock comp plan is a brilliant but potentially shareholder-unfriendly loophole that allows Elon Musk to bypass operational milestones and secure his payday based solely on market cap, with the risk falling on SpaceX shareholders.

## Transcript

members, but for now, let's talk about Elon. >> Well, I have to say this level of a shy stirring was not on my bingo board for Tesla and SpaceX. Obviously, we have been talking about the potential for a
merger between the companies for a long time. And we just found out that time. And we just found out that apparently all of the stock comp service-based milestones that Elon promised can basically get waived in the
event of a merger. Literally, the approved milestones that shareholders voted on at Tesla, which say that, "Hey, we want Tesla to hit a say that, "Hey, we want Tesla to hit a certain market cap and service-based
including 10 million active FSD subscriptions. We're currently at 1.48 million as of the second quarter. 55% of those people bought up front, so only around 700-ish thousand are actually paying on a
monthly basis, right? We're supposed to get to 10 million. We're a fraction of the way there, about 14% of the way there. Looking for 20 million cumulative vehicle deliveries, we're almost halfway there at about 9.7 million. Looking for
there at about 9.7 million. Looking for 1 million robotaxis in operation, we're at 20 unsupervised. It's trying to get there. It's taking a little longer than expected, but we're working on it. 1 million Optimus robots
delivered, obviously this is zero for, you know, commercial purposes. market-cap-based milestones, which of those will survive. But every single one of those milestones, Optimus, robotaxi, cumulative vehicle deliveries, FSD
subscriptions, all of those vanish as a stock comp in the event of a merger between Tesla and SpaceX. And that is between Tesla and SpaceX. And that is due to this particular clause on
it's actually on page four over here of the way I printed the stock comp plan. Some people have printed this to indicate it's on page 16. For me, it's on page five. I don't know. But, take a
This is the document here. So, you can see this is the 2025 CEO Performance Award Agreement for Tesla. 2025 CEO Performance Restricted
Stock Agreement. You can see here September 3rd, 2025. Tesla agrees to shareholders voted on, right? If we go down, these are the market caps, by the way. You can see right here. And they come with operational
milestones in addition to market cap, right? So, the first tranche, $2 trillion market cap for Tesla. That's on a 30-day like weighted moving average going back. So, it's not just like it's there for a
moment. It has to be there for a good month, approximately. Uh but, you would then have to achieve one of the 12 operational milestones. I just gave us some of them. Uh you can see here, this is what I listed. 20
million FSD subscriptions, the 1 million bot deliveries, the 1 million robotaxis, uh any of the following, which are basically increments of billions of
dollars of adjusted EBITDA. Okay. So, in other words, uh without any actual earnings requirements, you could basically get all the way to
operational milestone number four right here solely based on market cap without hitting any kind of earnings, right? But, in the event of a merger,
But, in the event of a merger, all of this right here is stricken. None of these matter. There's only one thing that matters. The only thing that matters for how much Elon gets paid is this section right here. Let's make
is this section right here. Let's make it a box. That's it. Market cap. Which given that SpaceX is controlled by Elon is controlled by Elon and SpaceX would be presumed to buy
Tesla, Elon can basically decide uh which >> [laughter] >> do you want to get paid at on, right? Now, of course, that is assuming that uh the market cap for
Tesla rises and in order to actually afford this at SpaceX without being uh you would assume that SpaceX would have to really grow in market cap substantially, which you know, it can do. But, where the clause is buried is
And again, the print formatting can kind of move this around a little bit. Right here. Notwithstanding section one, two, and three above. So, one, two, three uh above just for uh reference, that's
achievement of operational milestones. So, basically, how they determine cap. This is where the part of the 30-day market cap is, blah blah blah.
actual milestones. So, so just basically, ignoring all of that for a moment, in the event of a change in control, all of the operational milestones above shall literally be disregarded
and the market capitalization shall basically be what was the price immediately before the acquisition or the change in So, in other words, hey, if Tesla
uh gets some kind of really large premium offer, right? This is what the today, which you know, some people don't like the Wall Street basically making this argument that, "Hey, you know, Elon could do a $2
trillion acquisition, which would be about $506 per share over at Tesla." And Tesla SpaceX merger gives Musk a shortcut to his trillion-dollar payday."
different scenarios of prices and all this. I think this is a little article. But basically, if there's a a $2 trillion acquisition price for Tesla, which would
be a 53% premium to today's pricing, then Elon would be able to unlock his first tranche immediately regardless of whether or not a single one of those operational milestones has actually been
So, if if Elon does acquire Tesla for $2 trillion at about $506 per share, Elon would be granted about $17.9 billion
before tax in stock options. Now, $17.9 billion isn't really the play Now, $17.9 billion isn't really the play here. $17.9 billion for somebody who's a trillionaire isn't a big deal. That's like a $20 bill when you have $1,000 in
your bank account. I mean, you still want the 20, but it's a rounding error compared to the about 12.7% stake you have in Tesla. See, at $2 trillion, a 12.7%
stake at $2 trillion works out to about $250 $250 billion. So, in other words, the higher the share price is for Tesla at acquisition by SpaceX, the more money
Elon makes from Stock Comp without operational milestones, without operational milestones, and the more money that his actual Tesla ownership is worth which then just translates into more SpaceX stock.
So, what does this mean? In my opinion, this what does this mean? In my opinion, this is again brilliant optionality by Elon though it's kind of evil because it's not what shareholders really intended to
vote on. Uh but I don't think people would be pissed if their shares get sold for $500 or some crazy premium, right? So, it's sort of like it's a nuanced ah good one Elon. We see what you did there but we still like the fact that
we're getting paid a premium for the shares. The people who potentially get screwed are really the other SpaceX shareholders which which which I am >> [laughter] >> Uh so,
because if you pay too much of a premium for Tesla and it operational milestones, then this really fat premium at Tesla to
appreciated shares based on their own purchase price to allow him to move those into SpaceX ownership to increase his SpaceX ownership at a high Tesla his SpaceX ownership at a high Tesla valuation is good for him but not good
for SpaceX shareholders. So, that's the built-in risk factor here. But this is I have to say is brilliant but it's also shystery. This is not, in my opinion, what people thought they were voting for when they
voted for the stock comp plan. I think people are like, "Hey man, like if Tesla period of, you know, 30 days or whatever, hit those milestones and we can hit some of these operational milestones, fine. Let the guy be paid.
Let the man make his money. If he makes everybody else money and he actually grows the business to where it's a good business that's going into SpaceX which is then good and accretive to Tesla share well, maybe not accretive but it's
it's beneficial to SpaceX shareholders. Great. Let the man make his money. But, this kind of perverses the incentives a little bit. Really, what incentives a little bit. Really, what you're doing is you're saying, "Hey,
premium for Tesla, even though it's not hitting any of its massive you know, it's operational milestones, oh, well, we're still going to do the merger and we're still going to take our stock hump
we're still going to take our stock hump and our inflated ownership of SpaceX." it. And if any of that makes you nervous, don't worry, come join us over
We just sent out another buy alert. Talk to you soon. Goodbye and good luck. told us here? I feel like nobody else knows about this. >> Congratulations, man. You have done [music] so much. People love you. People
>> Kevin Paffrath there, financial analyst and YouTuber, Meet Kevin. Always great and YouTuber, Meet Kevin. Always great to get your [music] take.