Only Elon Musk can fire Elon Musk from SpaceX, filing shows
Experts say this level of control is unusual among dual-class share structures.
Highlights:
- SpaceX IPO filing shows Musk has sole power to remove himself as CEO or chairman
- Experts say this level of control is unusual among dual-class share structures
- SpaceX warns investors their influence over board decisions will be severely limited
SpaceX is telling investors that no one can fire Elon Musk from his role as chief executive and chairman of the board without the billionaire founder's consent, according to an excerpt of its IPO filing reviewed by Reuters.
The filing states that Musk "can only be removed from our board or these positions by the vote of Class B holders" - super-voting shares with ten votes apiece that he will control after the IPO, making his removal effectively a self-vote.
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If he "retains a significant portion of his holdings of Class B common stock for an extended period of time, he could continue to control the election and removal of a majority of our board."
The provision sits on top of a dual-class framework SpaceX plans to adopt at its IPO, a common setup among founder-led tech companies going public that gives founders and early investors greater control relative to public shareholders.
But even in those structures, boards typically retain formal authority to remove a CEO, even if founders can steer outcomes through voting power.
The full impact of the provision would depend on details in SpaceX's founding legal documents, corporate governance experts said.
Taken together, the provisions would give Musk an effective veto over any attempt to remove him, a level of control experts say goes beyond the norm by tying removal directly to his own voting power.
SpaceX warned prospective investors that the structure "will limit or preclude your ability to influence corporate matters and the election of our directors."
"This provision is not common. Usually removal of the CEO is a decision left to the board, and controllers rely on their power to replace the board," said Lucian Bebchuk, a Harvard Law School professor whose research focuses on corporate governance, law and finance.
SpaceX and Musk did not respond to requests for comment.
Dual-class share structures have become a standard feature of founder-led technology companies going public in recent years. Facebook, which listed in 2012, gave super-voting shares to pre-IPO holders including Mark Zuckerberg, though voting power later concentrated as early investors sold down their stakes.
More recent listings, including Figma, have concentrated super-voting shares more directly in founders after an IPO.
SpaceX will be split into Class A common stock for public investors and Class B super-voting shares for insiders. Musk will hold a majority of the voting power, tying board control and executive authority directly to shares he controls, Reuters previously reported.
The arrangement represents a departure from Tesla, which has a single share class.
SpaceX is incorporated in Texas, following Tesla, which Musk shifted there after a Delaware court voided his $56 billion pay package for running the automaker.
The compensation package was reinstated by the Delaware Supreme Court late last year.
