NEW YORK – SpaceX has adopted corporate governance policies that will erode typical shareholder protections in unprecedented ways, giving founder Elon Musk virtually unchecked executive authority when the rocket maker goes public later this year.
Excerpts of SpaceX’s IPO registration statement show the company is combining supervoting shares, mandatory arbitration, stricter rules on shareholder proposals and Texas corporate law to give Musk and other insiders broad control. At the same time, it sharply limits investors’ ability to challenge management, sue in court and force votes on governance issues. And the only person who can fire Musk is Musk, who will retain majority control through supervoting shares.
“It closes the voting door, the courthouse door and the proposal door simultaneously. It’s unprecedented in terms of creating a total lack of accountability,” said Bruce Herbert, CEO of Seattle-based sustainability-focused wealth management firm Newground Social Investment, which challenged Musk at his electric-vehicle company, Tesla, with a shareholder proposal that won 49% of the vote in November. For all of Musk’s controversies, many investors see him as a visionary able to achieve impossible things. At Tesla, the board recently awarded him a 10-year pay package worth close to $1 trillion, saying the company would lose significant value “without Elon.” At SpaceX, much of his pay is tied to launching massive data centers in space and colonizing Mars.