Musk has hedged against being fired from SpaceX - Reuters

SpaceX, a space company preparing to float on the stock exchange, told potential investors that only one person can fire CEO and Chairman Elon Musk - himself, Reuters writes, citing excerpts from the company's IPO materials.

According to these documents, Musk can only be removed from office if the holders of Class B shares - so-called super-voting shares that give ten votes each - vote in favor. Musk himself is expected to control most of the votes after the IPO. In effect, this means that his removal is only possible by voting against himself, Reuters writes.

The materials also state that if Musk "retains a significant portion of his Class B shares for an extended period of time, he will be able to continue to control the election and removal of a majority of the board of directors."

Such a structure would "limit or eliminate your ability to influence corporate matters and the election of our directors," SpaceX warned investors.

Reuters wrote earlier, citing documents, that SpaceX plans to consolidate Musk's control over the company during the IPO. The space company will use two classes of shares: Class A securities with one vote for investors buying on the exchange, and Class B securities with ten votes, which will be concentrated in Musk and other insiders.

The two-class share structure is a standard practice among technology companies that go public under the leadership of their founders, the agency notes. Meta operated under the same scheme: when it went public in 2012, the company granted super-voting shares to Mark Zuckerberg and other investors who held the securities before the IPO. The purpose of this scheme is to keep the founders and early investors in greater control of the company than those who bought shares already on the stock exchange. Even in such cases, however, boards typically retain the formal right to remove the CEO, the agency notes.

Musk would effectively be given a veto over any attempt to remove him - such a level of control is out of the norm, corporate governance experts interviewed told Reuters. The full effect of these provisions will depend on the details of SpaceX's founding documents, they said.

SpaceX and Musk did not respond to requests for comment.

This article was AI-translated and verified by a human editor