BY COMFORT OGBONNA
Leaders of three of the largest public pension systems in the United States have raised strong objections to the governance structure planned for SpaceX’s highly anticipated stock market debut, warning that the company’s proposed framework gives founder and CEO Elon Musk unprecedented levels of control while weakening investor protections.
In a letter sent Wednesday to Musk and senior SpaceX executives, officials representing the New York State Common Retirement Fund, the New York City pension system, and the California Public Employees’ Retirement System expressed what they described as “serious concerns” over the company’s reported governance arrangements ahead of its expected public listing.
The letter was signed by New York State Comptroller Thomas DiNapoli, New York City Comptroller Mark Levine, and Marcie Frost, who together oversee retirement systems managing more than $1 trillion in assets.
The pension leaders criticized what they called an “extreme” concentration of power around Elon Musk, arguing that the proposed structure would heavily favor management at the expense of shareholders. According to the officials, the arrangement could become one of the most management-friendly governance systems ever introduced in the U.S. public markets on such a massive scale.
SpaceX is widely expected to launch what could become the largest initial public offering in history. The aerospace giant is reportedly seeking to raise approximately $75 billion at a valuation of about $1.75 trillion, a figure that would instantly place the company among the most valuable publicly traded firms in the world.
Among the pension funds’ biggest concerns is the level of authority reportedly granted to Musk through super-voting shares, which would allow him to maintain dominant voting control over the company even after going public. The letter also objected to provisions that could effectively prevent shareholders from removing Musk as chief executive without his approval.
The officials further criticized plans that would reportedly shield Musk and the company from certain forms of shareholder litigation, including mandatory arbitration clauses tied to investor claims under federal securities laws. Such provisions could eliminate the ability of shareholders to pursue class-action lawsuits, a mechanism commonly used by investors to challenge corporate misconduct.
The pension leaders argued that the proposed structure leaves long-term investors with limited oversight tools. According to the letter, shareholders would lack a truly independent board majority and would face major obstacles in pursuing legal remedies over conflicts of interest or governance disputes.
The concerns also extend beyond SpaceX itself and into Musk’s growing business empire. The officials pointed to his leadership roles across multiple companies, including Tesla, xAI, The Boring Company, Neuralink, and the social platform X. They argued that managing several high-profile companies simultaneously could create conflicts over his time, focus, and business priorities.
The letter specifically highlighted concerns that Tesla and SpaceX could end up competing for Musk’s attention and resources, especially given the enormous compensation packages tied to both companies.
Another major issue raised by the pension officials was SpaceX’s reported plan to operate as a “controlled company,” a status that would exempt it from some stock exchange requirements involving independent directors and board committees. Under the reported arrangement, Musk would continue serving as CEO, chair, and chief technology officer simultaneously, consolidating operational and board authority under a single individual.
The pension systems also criticized SpaceX’s reincorporation in Texas, where corporate laws now allow companies to require shareholders to own up to 3% of outstanding shares before pursuing certain derivative lawsuits. At the company’s projected valuation, the officials argued, that threshold would effectively make legal action impossible for nearly all investors except Musk himself.
The letter additionally referenced Musk’s history with regulators and shareholder disputes. The officials pointed to his 2018 settlement with the U.S. Securities and Exchange Commission over his “funding secured” tweets regarding Tesla, as well as recent legal battles tied to his acquisition of Twitter, now known as X.
The pension leaders also questioned related-party transactions involving Musk’s companies. They referenced reports of SpaceX’s acquisition of xAI earlier this year and Tesla’s reported multibillion-dollar investment in SpaceX, arguing that such deals were completed before public shareholders or fully independent oversight structures were in place.
As part of their recommendations, the pension officials urged SpaceX to adopt a one-share, one-vote structure or phase out super-voting rights within seven years. They also called for the appointment of a majority-independent board, separation of the CEO and chair positions, removal of mandatory arbitration clauses, and independent approval processes for transactions involving Musk’s affiliated companies.
The pension leaders warned that because SpaceX is likely to become a major component of key U.S. stock indexes, institutional investors could eventually be forced to hold the company through passive investment strategies regardless of governance concerns.
They concluded by requesting a direct meeting with Musk and his advisers to discuss the issues before the company proceeds with its blockbuster public offering.
SOURCE:REUTERS
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