SpaceX Adopts Governance Rules Giving Musk Control Ahead of IPO

SpaceX has adopted corporate governance policies that will limit typical shareholder protections when the rocket maker goes public later this year. The policies combine supervoting shares, mandatory arbitration, stricter rules on shareholder proposals and Texas corporate law.

The changes give the company's founder and CEO broad control while sharply limiting investors' ability to challenge management, sue in court or force votes on governance issues. The only person who can remove the CEO from his position is the CEO himself.

He will retain majority control through supervoting shares. Excerpts of the company's IPO registration statement detail the planned structure. "It closes the voting door, the courthouse door and the proposal door simultaneously," said Bruce Herbert, CEO of Seattle-based sustainability-focused wealth management firm Newground Social Investment.

Herbert's firm previously submitted a shareholder proposal at another company that received 49 percent support in November. The CEO's compensation at the rocket maker is tied in part to launching massive data centers in space and colonizing Mars. Many investors continue to back the CEO's leadership despite past controversies.

The governance changes prevent shareholders from pursuing court challenges in most cases and restrict their ability to submit proposals for votes. Under the Texas corporate law framework, the CEO maintains effective control even after the company sells shares to the public.

The registration statement makes clear that these provisions will remain in place following the planned IPO. SpaceX has not released a full timetable for the share sale beyond stating it expects to occur later this year.