Elon Musk holds significant influence over SpaceX through his control of “super voting” shares. In January, SpaceX awarded Musk a pay package involving 1.3 billion restricted shares. This award was contingent on SpaceX establishing a colony on Mars with a million inhabitants and launching data centers into space. Although these objectives remain unfulfilled, Musk can still vote with these shares during shareholder decisions, as stated in SpaceX’s recent prospectus.
Ann Lipton, a law professor at the University of Colorado, Boulder, described this arrangement as unprecedented. She noted that Musk effectively bypassed standard corporate governance rules.
Aside from the restricted shares, SpaceX has implemented other unconventional governance practices. As it prepares for what might become the largest initial public offering (IPO) ever, SpaceX has valued itself at over $1.25 trillion. The IPO, expected as soon as next month, promises substantial benefits for Wall Street, Silicon Valley, and Musk himself.
Some of SpaceX’s atypical strategies include not planning for a majority independent board and opting not to use a committee of independent board members for executive pay decisions. Instead, the company prefers arbitration for resolving shareholder claims under federal securities law.
These measures primarily serve Musk, giving him greater control over SpaceX, where he holds 85 percent of shareholder votes. This setup allows him to appoint board insiders, control compensation determinations, and shield himself from shareholder lawsuits, according to corporate governance experts.
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