SpaceX is telling its investors that no one can fire Elon Musk as CEO and chairman of the board without the billionaire founder's consent, according to an excerpt from its IPO filing seen by Reuters.
The document states that Musk “may be removed from our Board of Directors or from these positions only by a vote of the holders of Class B stock.” These will be super-voting shares (each with ten votes), which he will control after the IPO.
This means that his eventual dismissal would amount, in practice, to a self-vote. 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 of Directors,” the filing with the U.S. Securities and Exchange Commission notes.
That provision is in addition to a two-class framework that SpaceX plans to adopt in its IPO, a structure commonly used by founder-led technology companies when going public. They give the founders and initial investors more control compared to public shareholders.
However, even in such structures, the Boards of Directors usually retain the formal authority to remove a CEO, even though the founders can influence the results through voting power.
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Corporate governance experts told Reuters that the full impact of that provision depends on the details in SpaceX's legal founding documents.
Taken together, these provisions would give Musk an effective veto over any attempt to be removed, a level of control that experts say goes beyond the usual by tying removal directly to his own voting power.
SpaceX told potential investors that this structure “will limit or preclude your ability to influence corporate matters and the election of our directors.”
“This provision is unusual. Typically, CEO dismissal is a decision left to the discretion of the Board of Directors, and the controlling holders rely on their power to replace the board,” Lucian Bebchuk, a professor at Harvard Law School whose research focuses on corporate governance, law and finance, told Reuters.
SpaceX and Elon Musk did not respond to requests for comment from Reuters.
