The founder is not in the room, and that is the point

On SpaceX’s third-quarter earnings call on Tuesday, Elon Musk said the boards of SpaceX and Tesla had each formed special committees of independent directors to review a possible merger, at the request of shareholders¹. CNBC TV18 called it a preliminary step towards what would be the largest corporate tie-up ever².

Why he is not in it. “Because I’m a conflicted party, I can’t actually be in the discussions of the special committees,” Musk said, calling it “an odd kabuki dance where two groups of people are talking, and I can’t be in the conversation”¹. He is chief executive and the largest individual shareholder of both companies¹.

Who could be. Tesla’s October 19 proxy filing lists seven independent directors under Nasdaq standards, including chair Robyn Denholm¹. SpaceX lists six¹. One name, Ira Ehrenpreis, appears on both lists¹. That overlap is worth watching: an independent director who sits on both sides of a deal is the sort of detail a committee is supposed to deal with in writing.

What is not decided. Musk said he supports the idea but called a merger far from certain: “At the end of the day, the shareholders have to be supportive of this”¹. At SpaceX he holds more than 50% of the voting power¹. At Tesla, he noted, a deal would need the votes of 50% of all shares outstanding, not just of those who vote¹.

The constructive reading. Special committees are slow and procedural, and they are often mocked. They exist so that the person with the most to gain on both sides does not set the price. Tuesday’s call showed the rule working as intended: the most powerful person in the story described himself as being outside the room.