Elon Musk's SpaceX is preparing for a public listing, but its governance plans are drawing criticism from some of the largest public pension funds in the United States. In a letter addressed to the rocket company's CEO, leaders of three pension fund firms have voiced concerns over SpaceX's reported governance structure, stating that it could reduce shareholder protections and grant Musk excessive control after the planned stock market listing.
Pension Leaders Express Serious Concerns
The letter was signed by Thomas DiNapoli, New York State Comptroller; Mark Levine, New York City Comptroller; and Marcie Frost, CEO of the California Public Employees' Retirement System, which represents some of the largest public retirement systems in the US. The officials wrote, "We are writing to express our serious concerns with the reported novel and extreme governance structure and provisions SpaceX is planning to disclose in its registration statement."
The planned SpaceX public offering could reportedly value the company at around $1.75 trillion and raise nearly $75 billion. The pension leaders argued that the proposed structure would heavily favour management and weaken accountability mechanisms for public investors.
Objections to Voting Control and Board Structure
The officials stated that the reported governance structure would give Musk significant power through super-voting Class B shares. According to the letter, Musk could retain around 79% voting control while holding roughly 42% of the company's equity. The pension leaders also objected to provisions that could make it difficult to remove Musk from his positions as CEO and chair. They wrote that under the reported structure, Musk's own vote would effectively be required for his removal.
"Removal of the Company's most powerful officer would, as a mathematical matter, require his own vote – essentially making him unfireable without his own consent," the letter stated.
The letter was also addressed to SpaceX President Gwynne Shotwell and CFO Bret Johnsen. The pension funds criticised the company's reported plan to adopt controlled-company status, which would allow it to bypass certain independent board requirements.
Concerns Over Musk's Multiple Roles
The officials further highlighted concerns around Musk's leadership roles across multiple companies, including Tesla, X, xAI, The Boring Company, and Neuralink. They argued that SpaceX and Tesla could end up competing for Musk's time and focus due to overlapping compensation packages and operational responsibilities.
"Long-term shareholders, under the reported governance structure, will have no independent board majority, no functioning derivative remedy and no entitlement to true judicial review through which to address the conflicts that this concentration of roles will inevitably produce," the officials wrote.
The pension funds also raised objections to reported mandatory arbitration clauses and Texas corporate law provisions that could make shareholder lawsuits harder to pursue.
Call for Governance Reforms
In the letter, the officials urged SpaceX to reconsider its proposed governance model prior to submitting its IPO filings. They advocated a one-share-one-vote structure, a majority-independent board, separation of the roles of CEO and chair, and the removal of mandatory arbitration provisions for shareholder claims.
