SpaceX’s plan to go public would reportedly give CEO Elon Musk “virtually uncontrolled executive authority” and limit shareholders’ rights to sue the company. The plan, reported today by Reuters, could prevent shareholder lawsuits blocking an attractive Musk pay package at Tesla.
Reuters wrote, “Excerpts from SpaceX’s IPO registration statement reviewed by Reuters show the company is combining supervoting shares, mandatory arbitration, strict rules on shareholder proposals and Texas corporate law to give Musk and other insiders sweeping control.” “At the same time, it sharply limits investors’ ability to challenge management, sue in court, and vote on governance issues.”
Reuters said the policies would “erode specific shareholder protections in an unprecedented way,” and “the only person who could fire Musk is Musk, who would retain majority control through supervoting shares.”
SpaceX is reportedly planning to implement a mandatory arbitration clause by taking advantage of the September 2025 policy statement issued by the Securities and Exchange Commission. The SEC’s new position is that the mandatory arbitration provisions are not inconsistent with the federal securities laws.
SpaceX Will Prevent Shareholder Lawsuits By “Make” IPO[ing] “It is clear that anyone who owns ‘irrevocable and unconditional’ shares waives all rights to pursue a jury trial,” Reuters wrote. According to the filing, “Shareholders will also be prohibited from bringing a class action against the company, its directors, officers, controlling shareholders or bankers associated with the IPO.”
Musk will reportedly have the power to “select, remove or fill any vacancy” on the board of directors, and “control other issues requiring shareholder approval, including M&A transactions, which would make it easier for him to merge with Tesla later if he wishes,” Reuters wrote. The article states that he currently owns 42.5 percent of SpaceX’s equity, has 83.8 percent of voting control, and will hold more than 50 percent of the voting power once it goes public.
<a href