In January, SpaceX granted Elon Musk, its founder and chief executive, a pay package of 1.3 billion restricted shares. The award was contingent on the rocket company’s establishing a colony on Mars with one million inhabitants and launching high-powered data centers into space.
Mr. Musk has not achieved those goals. Even so, he can vote those 1.3 billion shares in shareholder decisions, according to SpaceX’s offering prospectus, which was released on Wednesday. In other words, the company is allowing Mr. Musk to vote with shares he has not yet earned.
“I have never heard of this,” said Ann Lipton, a law professor at the University of Colorado, Boulder. “He basically found a way to hack the normal rules of corporate organization.”
The restricted shares weren’t the only unusual corporate governance arrangement that SpaceX revealed as it prepares what could be the largest initial public offering ever. The company, which builds rockets and operates the Starlink satellite internet service, has valued itself at more than $1.25 trillion, and its I.P.O. — which is set to happen as soon as next month — is likely to create a bonanza for Wall Street, Silicon Valley and, of course, Mr. Musk.
Among the atypical arrangements, SpaceX does not plan to have the majority of its board be independent directors. It added that it would not use a committee of independent board members to determine executive compensation, as most companies do. And its governing documents say any shareholder claims under federal securities law must be resolved through arbitration.
All of these moves appear to benefit one person: Mr. Musk.
The measures give him more command over a company where he controls 85 percent of shareholder votes, corporate governance experts said. They allow Mr. Musk to put more insiders onto SpaceX’s board, pick the people who determine his pay and largely insulate himself from shareholder lawsuits, they said.
The measures are “a defensive moat” that will “entrench him permanently” as chief executive, said Brian Quinn, a law professor at Boston College who studies corporate governance. He called the January compensation package “insane.”
What SpaceX is doing goes beyond the corporate governance structures at Tesla, Mr. Musk’s electric carmaker. In September, Tesla awarded him a stock compensation package tied to increases in the company’s valuation and operational milestones, such as the commercial deployment of one million autonomous taxis. But Mr. Musk cannot vote with those shares until he hits the operational goals, according to Tesla’s filings.
SpaceX’s governance measures serve as a warning to those looking to buy into its I.P.O., Mr. Quinn said. “It’s terrible for shareholders,” he said.
Mr. Musk, SpaceX and Tesla did not respond to requests for comment.
At Tesla, where Mr. Musk has less than a 30 percent ownership stake, he has griped about his lack of control and the potential to be challenged by other shareholders. But SpaceX has different classes of stock, and his power there stems from what are known as “super voting” shares.
Outside investors in SpaceX are able to buy Class A shares, which confer one vote apiece. According to the company’s prospectus, Mr. Musk owns more than 5.5 billion Class B shares — “super voting” because they carry 10 votes a share. In total, he has about 94 percent of SpaceX’s Class B shares and 85 percent of all votes.
Mr. Musk’s super voting shares stand out. Meta and Google also have super voting shares for its executives. Even so, Mark Zuckerberg, Meta’s chief executive, controls 61 percent of the votes at his company.
The shares give Mr. Musk the power to decide many company matters on his own. “Mr. Musk will have the power to control the outcome of matters requiring shareholder approval, including election of all our directors, and to control our business and affairs,” according to SpaceX’s prospectus.
Among SpaceX’s eight board members are Mr. Musk’s friends Luke Nosek, a venture capitalist, and Antonio Gracias, a private equity investor who previously was on Tesla’s board. They did not respond to requests for comment.
A significant portion of Mr. Musk’s super voting shares were awarded in his January compensation package. He can take out loans against those shares with approval from a board that he controls, Boston College’s Mr. Quinn said, adding that because the billionaire has not technically earned that stock, he does not have to pay taxes on the grant.
Some of SpaceX’s governance measures have already drawn scrutiny. This month, leaders overseeing state and city pension funds in New York and California criticized the company’s stipulation that shareholder challenges must be resolved through mandatory arbitration.
“Mandatory arbitration eliminates the class-action lawsuit structure essential to remedying widespread harms,” officials overseeing the pension funds wrote in a letter to SpaceX. They added that no major U.S. issuer had ever had such a provision for its I.P.O.
SpaceX’s corporate governance structure “freaks me out,” Ms. Lipton of the University of Colorado said.
