\n<\/p>\n
SpaceX requires employees<\/span> to agree to some unusual terms related to their stock awards, which have a chilling effect on staff, according to sources and internal documents viewed by TechCrunch.\u00a0<\/p>\n That includes a provision that allows SpaceX the right to purchase back vested shares within a six-month period following an employee leaving the company for any reason. SpaceX also gives itself the right to ban past and present employees from participating in tender offers if they are deemed to have committed \u201can act of dishonesty against the company,\u201d or to have violated written company policies, among other reasons.\u00a0<\/span><\/p>\n Employees often aren\u2019t aware of the \u201cdishonesty\u201d condition when they initially sign up on the equity compensation management platform, one former employee said.\u00a0<\/span><\/p>\n If SpaceX bars an employee from selling stock in the tender offers, the person would have to wait until SpaceX goes public to realize cash from the shares \u2014 and it\u2019s unclear when that will happen, if it ever does.<\/span><\/p>\n SpaceX did not respond to multiple requests for comment.<\/p>\n Like most tech companies, SpaceX includes stock options and restricted stock units (RSUs) as part of its compensation package to attract top talent. No doubt this has paid off: SpaceX\u2019s 13,000-strong workforce is helping to push the limits of what was thought of as possible in aerospace, deliver crew to and from the International Space Station, and build out the largest satellite constellation in history.\u00a0<\/span><\/p>\n Unlike stock in public companies, stock in private companies cannot be sold without the company\u2019s permission. So employees can only turn that part of their pay into cash when their employer allows such transactions. SpaceX is known for generally holding buyback events twice a year \u2013 meaning SpaceX will buy the shares back from employees; this schedule, which has been fairly reliable in recent years, means that employees have biannual opportunities to liquidate assets that have likely appreciated since the vesting date.\u00a0<\/span><\/p>\n It\u2019s not uncommon for additional terms to be attached to employee stock compensation at startups and employees who stay with the company long enough to vest stock may have acquired stock under various stock plans with various conditions. Yet no employee at startups and private companies are entitled to sell their stock.<\/span><\/p>\n Indeed, at SpaceX, if an employee was fired \u201cfor cause,\u201d the company stated it can repurchase their stock for a price of $0 per share, according to documents viewed by TechCrunch.\u00a0<\/span><\/p>\n \u201cIt sounds unusual to [a] have cause type exclusion provision in a tender offer agreement,\u201d attorney and stock options expert Mary Russell told TechCrunch. <\/span>She said it is also unusual for a traditional venture-based startup<\/span> to have repurchase rights for vested shares that are unrelated to a bad-actor-type \u201cfor cause\u201d termination.<\/span><\/p>\n These terms \u201ckeep everyone under their control, even if they have left the company,\u201d one former employee said because employees don\u2019t want to be forced to return their valuable SpaceX stock for no compensation.<\/span> \u201cAnd since there is no urgency by SpaceX to go public, being banned from tender offers effectively zeros out your shares, at least for a long time. Even though you paid thousands to cover the taxes.\u201d<\/p>\n \u201cThey also try and force a non-disparagement agreement on you when you leave, either with a carrot, or a stick if they have one,\u201d the person said.<\/p>\n As recently as 2020, SpaceX was also providing to employees a separate document outlining the risks of investing in the company\u2019s securities. It reads similar to an S-1 registration statement that public companies must file; given that SpaceX is private, it is a unique disclosure into the company\u2019s risk profile.\u00a0<\/span><\/p>\n To a large extent, such documents are written to minimize the company\u2019s legal liability. The SpaceX document rightly points out that equity investments are inherently risky, because participants are trading a highly liquid asset \u2013 cash \u2013 for highly illiquid shares. As such, they exhaustively list various material risk factors, no matter how unlikely \u2014 for example, in its risk document, seen by TechCrunch, SpaceX includes that Hawthorne, California, which is home to its headquarters, is a \u201cseismically active region.\u201d\u00a0<\/span><\/p>\n The company also includes a number of risk factors related to Elon Musk, its CEO and founder.\u00a0<\/span><\/p>\n \u201cTo date, the Company has been highly dependent on the leadership provided by the Company\u2019s founder, Chief Executive Officer and Chief Technical Officer, Elon Musk,\u201d the document reads. \u201cSpaceX, Mr. Musk, and other companies Mr. Musk is affiliated with, frequently receive an immense amount of media attention. As such, Mr. Musk\u2019s actions or public statements could also potentially have a positive or negative impact on the market capitalization of SpaceX.\u201d\u00a0<\/span><\/p>\nEmployees pay taxes on their shares<\/span><\/h2>\n
SpaceX names Elon Musk actions as a \u2018risk factor\u2019<\/span><\/h2>\n