Elon Musk bullet-proofed his $1 trillion ‘Mars-shot’ pay at SpaceX after the epic battle over his $56 billion moonshot at Tesla

Remember the legal brawl CEO Elon Musk faced over his $56 billion moonshot pay package at Tesla? As SpaceX prepares to go public in a $75 billion initial public offering next week, Musk is pushing the limits of his pay package into a whole other universe, and this time, he’s designed it so that he will never have to fight that kind of battle again.

What sets Musk’s SpaceX pay package apart is how thoroughly insulated it is from the kind of lawsuit that nearly cost Musk his, at-the-time, unprecedented award from Tesla, which was the largest in U.S. corporate history. First, the Tesla board granted Musk the 2018 award after the company was already public, which allowed a shareholder to argue it was an after-the-fact transfer of wealth from investors who never signed off. A Delaware Chancery Court judge agreed and voided it. This time, Musk’s massive stock grant, with a potential $1.1 trillion value, is spelled out clearly in SpaceX’s IPO registration statement for any investor to read about before buying a single share.

To boot, SpaceX is no longer incorporated in Delaware, the state whose court struck down the Tesla package. In fact, Musk very publicly moved SpaceX to Texas after the court rescinded his Tesla award, where a shareholder would need to own 3% of the company—a multibillion-dollar stake at SpaceX’s projected $1.8 trillion valuation—merely to bring a legal claim, which a special Texas business court would hear with no jury.

There are no surprises here, said Jay Ritter, a University of Florida finance professor and longtime scholar of IPOs.

“If you don’t like it, you don’t have to buy it at that price,” said Ritter, referring to the $135 per-share price planned for the IPO.  “And that’s a big difference; with the Tesla pay package—the company was already public.” 

Musk’s SpaceX compensation deal, which is currently valued at $175 billion with the potential for up to $1.1 trillion in upside, requires him to achieve never-before-seen feats such as a $7.5 trillion market capitalization, a human community on planet Mars, and data centers somewhere other than Earth.

The astronomical pay package and eye-popping performance targets are on brand for Musk, whose track record of innovation is perhaps matched only by his thirst for attention. In this case, they serve the practical purpose of getting the world buzzing about both him and the SpaceX IPO.

“This is marketing 101,” said Eric Hoffmann, chief data officer at compensation consulting firm Farient Advisors. “They’re driving hype to drive the stock price and the amount of money they can raise.”

In fact, a close reading of the 300-page-plus IPO prospectus suggests that Musk’s stock-compensation package is not really designed for him not to reap the full payout. SpaceX describes those data center and Mars milestones as “improbable,” meaning even the company doesn’t think Musk can do it.

So why build a payday around goals Musk will almost certainly never reach?

They ensure the world’s richest man maintains something he might value even more from the compensation deal: his near-iron grip over SpaceX.

Musk’s 2018 $56 billion moonshot grant at Tesla was structured as a stock option package, and thus didn’t give him nearly the same level of sway over the company and board without first hitting the goals laid out in the award. The SpaceX stock-based awards—which consist of a 1.3 billion........

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