The document indicates that Musk “can only be removed from our board or these roles by the vote of Class B holders” – super-voting shares that each carry ten votes, which he will control after the IPO, effectively allowing his removal to be a self-vote.
If he “maintains a substantial portion of his Class B common stock holdings for a long duration, he could continue to oversee the election and removal of a majority of our board.”
This provision is part of a dual-class structure that SpaceX intends to implement at its IPO, a typical arrangement among founder-led tech companies going public, which grants founders and early investors more control compared to public shareholders.
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However, even in these structures, boards generally retain the formal authority to dismiss a CEO, even if founders can influence outcomes through their voting power.
The full effects of this provision will depend on specifics in SpaceX’s foundational legal documents, corporate governance experts noted.
In combination, these provisions would grant Musk an effective veto over any efforts to remove him, a degree of control that experts say exceeds the norm by linking removal directly to his own voting power. SpaceX cautioned potential investors that this structure “will limit or prevent your ability to influence corporate decisions and the election of our directors.”
“This provision is unusual. Typically, a CEO’s removal is a board decision, and controllers depend on their authority to replace the board,” stated Lucian Bebchuk, a Harvard Law School professor with a focus on corporate governance, law, and finance.
SpaceX and Musk did not respond to requests for comment.
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Dual-class share structures have emerged as a common characteristic of founder-led tech companies going public in recent years. Facebook, which became public in 2012, allocated super-voting shares to pre-IPO stakeholders, including Mark Zuckerberg; however, voting power eventually became concentrated as early investors sold off their shares. More recent listings, like Figma, have aimed to centralize super-voting shares more closely among founders post-IPO.
SpaceX will feature Class A common stock for public investors and Class B super-voting shares for insiders. Musk will possess a majority of the voting power, linking board control and executive authority directly to the shares he controls, as previously reported by Reuters.
This setup marks a shift from Tesla, which operates with a single share class.
SpaceX is incorporated in Texas, following Musk’s relocation of Tesla there after a Delaware court nullified his $56 billion compensation package for leading the automaker. The Delaware Supreme Court reinstated the pay package late last year.
