Top pension officials from New York and California have expressed concern over the governance structure of SpaceX ahead of its public listing. The officials, including New York State Comptroller Thomas DiNapoli, New York City Comptroller Mark Levine, and California Public Employees’ Retirement System (CalPERS) CEO Marcie Frost, have written to SpaceX CEO Elon Musk to voice their concerns.
Comptrollers Express Concern
The letter, addressed to Musk, highlights the “extreme” governance structure of the company, which could concentrate power in the hands of Musk. The officials object to Musk’s voting control over the stock, his power over the company’s CEO removal, and the adoption of a dual-class share structure. This structure would give Musk’s Class B shares significant voting power, with each share worth 10 regular shares.
The officials also raised questions about Musk’s leadership of multiple companies, including Tesla, xAI, The Boring Co., and Neuralink. They flagged CEO compensation packages for Musk, warning that the companies could risk competing against one another.
Governance Structure and IPO Plans
SpaceX plans to adopt a controlled-company status, which would allow it to bypass requirements for a majority-independent board or independent compensation and nominating committees during Musk’s tenure as CEO, chief technology officer, and chair. New York and California pension funds would become shareholders in the company through passive allocations following its listing.
The officials urged SpaceX to employ a one-vote, one-share structure and separate the Chair and CEO roles. They also expressed concern over the company’s reliance on unproven technology and significant risks associated with its orbital datacenter goals and plans to colonize Mars.
SpaceX’s Starship Plans
SpaceX has outlined its plans for its Starship rocket, including the development of reliable engines and reusable heat shields. However, Musk has acknowledged that figuring out how to create these components remains a crucial challenge for the company.
The company’s IPO, which is targeting a $1.75 trillion valuation, has sparked controversy over its governance structure and management bias. As SpaceX prepares to go public, it remains to be seen how the company will address these concerns and ensure a fair and transparent governance structure.