How Elon Musk Aims to Boost His Influence Through the SpaceX IPO

Elon Musk wields extraordinary influence over the companies he leads. While he calls himself “TechnoKing” at Tesla, his true dominance is evident at SpaceX, where he exercises unparalleled authority over one of the globe’s most valuable companies.

Musk’s king-like control at SpaceX became clear with the IPO filing released on Wednesday.

Post-IPO, Musk will retain the roles of CEO, CTO, and chairman of SpaceX’s board. Although his current 85% voting power will diminish after the IPO, he will still possess more than 50%, allowing him to appoint directors as he sees fit. This effectively shields him from termination.

The company has placed restrictions on shareholders’ ability to initiate legal actions, taking advantage of a more relaxed regulatory climate in Texas, its home state—an environment Musk helped cultivate by vocally shifting Tesla’s incorporation from Delaware to Texas.

As stated bluntly in its IPO filing, SpaceX declares: “This will limit or preclude your ability to influence corporate matters and the election of our directors.”

More control than Mark

In the past two decades, tech founders have increasingly secured control over publicly traded companies, particularly as giants like Google and Meta (formerly Facebook) adopted dual-class share structures.

However, Musk and SpaceX are taking control to new heights, according to Ann Lipton, a law professor at the University of Colorado.

Lipton mentioned in a blog post last Friday that Musk is dismantling three of the most significant tools shareholders typically use to hold a public company’s executives accountable.

Firstly, there’s the voting power. SpaceX utilizes a dual-class structure, with Musk owning 93.6% of Class B super-voting shares that are unavailable to the public during the offering.

Even with plans for the largest IPO in history, Musk will maintain over 50% of the voting rights once SpaceX goes public. This categorizes the company as a “controlled company” under stock exchange rules, allowing it to exempt itself from certain independent oversight guidelines.

In its IPO filing, SpaceX specifies that regular shareholders (who will hold Class A shares) “will not have the same protections afforded to shareholders of companies subject to all corporate governance requirements of Nasdaq.”

Significantly, Musk’s voting authority permits him to make decisions that usually require shareholder approval, including substantial mergers and acquisitions. Should Musk choose to merge with or acquire Tesla—a widely speculated scenario—he won’t need to convince SpaceX shareholders.

The contrast in voting power between SpaceX and Tesla is glaring. At Tesla, Musk holds roughly 20% voting control, necessitating substantial effort in recent years to secure additional stock options, which culminated last year in a $1 trillion compensation package approved by shareholders.

A legal shield

The second avenue of shareholder influence that SpaceX is limiting pertains to the right to sue.

By moving its incorporation to Texas, SpaceX has mandated that shareholders can’t initiate a “derivative suit” unless they own at least 3% of the company’s shares. At the projected $1.75 trillion valuation, this is roughly a $52 billion position.

Derivative suits enable shareholders to sue a company’s directors on behalf of the company itself, akin to a situation where a minor shareholder sued Tesla’s board over Musk’s $56 billion pay package in 2018.

Additionally, SpaceX has incorporated provisions in its bylaws directing most lawsuits either to the newly established Texas Business Court, operational since 2024, or through mandatory arbitration.

In Lipton’s words to TechCrunch, “Forget it; that’s it. There isn’t going to be a lawsuit” in most instances.

This contrasted sharply with the scenario prior to Musk’s relocation of Tesla from Delaware to Texas, she noted.

Indeed, Lipton remarked that until a few years ago, Delaware was scrutinizing the very type of controlled company SpaceX has become.

“You could have dual-class shares granting excessive voting power, but it also meant enhanced oversight by the Delaware court system,” she explained.

Vote with your feet

The final avenue for shareholder influence that SpaceX has restricted is the ability to sell shares and exit.

SpaceX has successfully lobbied the Nasdaq stock exchange to relax its rules regarding how and when companies are included in its Nasdaq 100 index—a collection of large-cap companies marketed as “fundamentally sound and innovative.”

Previously, this process could take months; now, SpaceX is expected to be added in just weeks.

When companies are included in indices such as the Nasdaq 100 or S&P 500, they automatically become acquisitions for major financial institutions (like 401(k) providers).

As a result, Lipton posits that SpaceX’s stock price will likely surge in the initial trading days due to this imminent inclusion, as traders will want to buy before institutional investors inflate the price further.

“Typically, if you can’t vote and can’t sue, you can at least sell and drive down the price, which causes pain,” Lipton explained. “It hurts the controller [of the company] and executives who are compensated in stock. But even that is being manipulated now.”

Chan Ahn, a former Goldman Sachs and JPMorgan executive, currently leading the tokenized private equity firm Tessera, broadly agrees that rapid inclusion in the Nasdaq 100 could elevate the stock price.

Nevertheless, he told TechCrunch that shareholders will still have the option to “vote with their feet” and liquidate their stock—it just may not have the same effect.

“You don’t have to buy, and if you dislike what you have, you can sell,” he noted.

All the money

In addition to this control, Musk stands to amass an unprecedented wealth from SpaceX’s future projects.

The IPO is set to potentially make him the world’s first trillionaire, and he has also been awarded a compensation package comprising 1 billion Class B shares.

These shares won’t vest until Musk increases the company’s valuation to $7.5 trillion and establishes a “permanent human colony on Mars with at least one million inhabitants.”

While the “Mars colony” requirement may seem daunting, Musk can still unlock considerable value from these shares long before SpaceX reaches Mars.

Per the stock award agreement linked to the IPO filing, SpaceX allows Musk to vote these shares even before they vest. Furthermore, he can use them as collateral for loans, a strategy employed by the ultra-wealthy to access cash without incurring taxes on unrealized gains—something Musk has frequently done with his shares in both SpaceX and Tesla.

While leveraging these Mars colony shares technically requires board approval, Musk has control over the board. Thus, the final say rests with him.

These highly valuable shares convert to standard common stock upon sale.

However, one notable exception exists. Musk can place them in trusts to preserve their super-voting status, indicating that the leader of SpaceX—who reportedly has at least 14 children—may be strategizing for dynastic control.