Elon Musk maintains significant power over SpaceX due to his control of “super voting” shares. In January, SpaceX offered Musk, the founder and CEO, a compensation package comprising 1.3 billion restricted shares. However, this award is contingent upon SpaceX’s establishment of a colony on Mars with a population of one million and launching advanced data centers into space.
Despite Musk not meeting these targets, he can still vote with these unearned shares, according to SpaceX’s prospectus. Law professor Ann Lipton from the University of Colorado, Boulder, noted, “I have never heard of this.” She remarked that Musk seemingly discovered a method to bypass conventional corporate governance rules.
Besides the unconventional share voting rights, SpaceX is preparing for a potentially record-breaking initial public offering (IPO). The company, which constructs rockets and manages the Starlink satellite internet service, is valued at over $1.25 trillion. This IPO, expected soon, could lead to substantial financial gains for Wall Street, Silicon Valley, and Elon Musk himself.
SpaceX’s governance strategies include not ensuring the majority of its board comprise independent directors. The company also announced that it won’t use independent board member committees to decide executive pay, a common practice in other firms. Additionally, its governing documents mandate arbitration to resolve shareholder claims under federal securities law.
Corporate governance experts believe these arrangements primarily benefit Musk. By controlling 85 percent of shareholder votes, Musk can appoint more insiders to SpaceX’s board, select those who decide his compensation, and largely shield himself from shareholder lawsuits.