SpaceX’s Unusual Stock Terms Raise Concerns Among Employees

SpaceX has raised eyebrows with its unique stock terms, which some employees say have a chilling effect on staff, according to sources and internal documents obtained by TechCrunch.

Among the provisions causing concern is one that grants SpaceX the right to repurchase vested shares within six months of an employee leaving the company for any reason. Additionally, SpaceX reserves the right to prohibit both past and present employees from participating in tender offers under certain conditions, including acts of dishonesty against the company or violations of written company policies.

The conditions surrounding the prohibition on selling stock are often not clearly communicated to employees when they initially sign up for the equity compensation management platform, leaving some feeling blindsided.

For employees barred from selling stock, the only opportunity to realize cash from their shares would come when SpaceX goes public – a prospect that remains uncertain.

While SpaceX typically holds buyback events twice a year, employees must wait for these opportunities to liquidate their shares, which can result in extended periods without access to the value of their equity.

Moreover, if an employee is terminated “for cause,” SpaceX reserves the right to repurchase their stock for $0 per share, as outlined in documents seen by TechCrunch.

These stringent terms have led some employees to feel trapped, as they risk losing valuable stock without compensation if they leave the company or are prevented from participating in tender offers.

In addition to stock-related concerns, SpaceX’s risk disclosure document highlights potential risks associated with CEO Elon Musk’s actions and public statements. The document warns that Musk’s actions could impact the market capitalization of SpaceX, citing his past legal issues with the SEC as an example.

Furthermore, the document acknowledges the possibility that SpaceX’s common stock may never be publicly traded, posing a potential obstacle for employees seeking liquidity for their shares.

Despite these challenges, SpaceX remains one of the most valuable private companies globally, with a valuation reaching $180 billion as of December 2023. However, concerns about stock terms and potential obstacles to liquidity underscore the complexities of equity compensation in the private sector.

As SpaceX continues to push the boundaries of aerospace technology, its unique stock terms raise questions about employee compensation and the company’s approach to equity ownership.