By Jeffrey Dastin, Ross Kerber and Echo Wang
SAN FRANCISCO / BOSTON, April 23 (Reuters) – SpaceX is telling prospective investors its board will not need a majority of directors who are independent of the company, according to an excerpt of its IPO filing reviewed by Reuters, underscoring how founder Elon Musk is retaining control of the rocket and artificial intelligence maker.
In a departure from the vast majority of public companies, SpaceX said it would maintain “controlled company status” after its $1.75 trillion IPO, expected this summer. That means it will not need a majority of it board to be independent, nor need independent compensation and nominating committees, the filing excerpt showed. It only must have an audit committee composed entirely of independent directors, the document stated.
A 2024 study by the National Association of Corporate Directors found that just 3% to 4% of the Russell 3000 index was comprised of firms where insiders constituted a board majority.
SpaceX may still choose to add independent directors. One precedent is Meta Platforms , a peer technology company whose CEO’s majority voting power gives it a “controlled company” status under Nasdaq rules. Meta has continued to have most of its directors be independent, nonetheless.
SpaceX did not immediately return a Reuters request for comment on the filing.
The news follows Reuters reporting that found Musk and a small group of insiders have super-voting shares that would outweigh other investors.
Having a like-minded board is not new for Musk. While his electric carmaker Tesla lists a majority of its nine directors as being independent under Nasdaq standards, many critics have raised concerns that the board – which includes Musk’s brother Kimbal and former Tesla Chief Technology Officer JB Straubel – remains too close to the CEO.
Those concerns have contributed to a long cycle of complaints at Tesla such as a judge’s 2024 ruling to rescind Musk’s $56 billion pay package on the grounds the board lacked independence when it awarded the pay in 2018. Musk won a ruling restoring the pay in December.
On the other hand, having controlled company status could give SpaceX more flexibility to strike pay arrangements, said David Larcker, a Stanford University professor who follows corporate governance.
The status “seems to alleviate some of the things that have been legally painful for Tesla,” Larcker said.
SpaceX’s board will oversee potentially huge amounts of compensation for Musk according to related parts of the document, which outline market capitalization milestones of as much as $7.5 trillion as goals for restricted stock payments to vest.
The document also states the board at different points established vesting goals such as “the Company’s establishment of a permanent human colony on Mars with at least one million inhabitants,” and the completion of “non-Earth-based data centers capable of delivering 100 terawatts of compute per year.”
(Reporting by Jeffrey Dastin in San Francisco, Ross Kerber in Boston and Echo Wang in New York; Editing by Kenneth Li and Kim Coghill)
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