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Elon Musk Explains Why the SpaceX Board Must Be Powerless to Fire Him

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I think you should heed the warning. After all, if you’re considering buying SpaceX stock, what do you think will happen to SpaceX after its expected IPO next month? You can’t imagine SpaceX becoming some boring pillar of economic stability like AT&T, can you?

Speaking to his employees in February, Musk described his vision for the future of SpaceX as one filled with space catapults, a Dyson sphere around the sun and AI that feeds on secret knowledge previously known only to long-dead aliens.

In other words, if you’re imagining a good old-fashioned American capitalist enterprise with healthy profits, dividends and market-friendly competition, like something from a 1940s propaganda film, you’re investing in the wrong company.

Wisely: SpaceX’s corporate governance governance will be set up in such a way that the CEO and Chairman can’t be firedAccording to a Reuters report last month. SpaceX will have different classes of stock with different power levels. Class A for pension funds and Robinhood users – in other words, for the people – and Class B for the people who matter. Class B stock will have ten times the voting power of Class A stock, and Musk will control the Class B stock.

The IPO filing, part of which is quoted in the Reuters article, states this. Musk “may be removed from our board or from these positions only by a vote of the Class B holders.” If Musk “retains a significant portion of his holdings of Class B common stock for an extended period of time, he may continue to control the election and removal of a majority of our board.”

Basically, Musk can remain in both positions as long as he wants, and can easily veto any attempts to fire him. Common shares without voting power are not rare these days, but a powerless board is rarer. “Usually the decision to remove a CEO is left up to the board, and controllers rely on their power to replace the board,” Lucian Bebchuk, a Harvard corporate governance expert, told Reuters.

So if you have stock in SpaceX, you’re in for a ride.

On Friday, in response to a Financial Times article about SpaceX’s harsh governance plan, Musk explained himself. Like:

“I need to make sure SpaceX remains focused on making life multiplanetary and raising consciousness to the stars,” he wrote.

He does this often. In response to criticism – or often in response to fans shielding him from criticism – he would say some changes. If people are bad towards me, humanity will never be multiplanetary.

For example, when Cleantechnica jumped to Bernie Sanders’ defense after he criticized him on income inequality in 2021, replied“I am gathering resources to help make life multiplanetary and bring the light of consciousness to the stars.” That same year, in response to European finance ministers regarding its potential monopoly on satellite launches, he posted, “SpaceX is developing the rockets needed to make life multiplanetary – massively complete and increasingly reusable.” Also in 2021, when the FAA expressed concern that SpaceX had squandered its approval from the federal government, he wrote about how much he hated the FAA’s space division, saying, “Their rules are for a handful of expendable launches per year from a few government facilities. Under those rules, humanity will never get to Mars.”

Some are predicting soon after the IPO that Musk’s net worth will cross the trillion-dollar threshold due to the increase in SpaceX’s valuation. This is not a minor side effect. Elon Musk is more or less implying that he is humanity’s future hero, and everyone else is an NPC. Do you believe so? Then by all means buy stocks (this is not financial advice).





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