SpaceX internal documents reveal: Additional terms for buybacks lead to "chilling effect" on employees

News from this site on March 16, foreign technology media TechCrunch recently disclosed an internal SpaceX document, showing that employees participating in the "employee stock ownership" plan must sign special terms, resulting in a "chilling effect."

SpaceX employees will repurchase relevant shares within 6 months after their resignation, but one of the regulations is quite special. If SpaceX has the right to ban past and current employees from participating in buybacks if they are deemed to have acted "dishonestly toward the company" or violated the company's written policies, among other reasons.

A former employee said that when employees register on the equity compensation management platform, they often do not know the condition of "dishonesty". If SpaceX prohibits an employee from selling stock in a tender offer, the employee would have to wait until SpaceX goes public to cash out the stock, and it's unclear when SpaceX will go public.

Like most tech companies, SpaceX uses stock options and restricted stock units (RSUs) as part of its compensation package to attract top talent.

There’s no doubt it’s already paying off: SpaceX’s 13,000 employees are helping push the limits of aerospace, including flying astronauts to and from the International Space Station and building the largest satellite constellation in history.

Unlike shares of a public company, shares of a private company cannot be sold without the company's permission. Therefore, employees can convert this portion of their compensation into cash only if their employer allows such transactions.

SpaceX typically holds buyback events twice a year, meaning it buys back stock from employees; this schedule has been pretty reliable in recent years, meaning employees have two opportunities to cash out every year.

And once the resignation is caused by "dishonest behavior towards the company", then SpaceX's stock repurchase price will be $0.

Lawyer and stock options expert Mary Russell said it would be highly unusual to include an exclusion clause in a tender offer agreement, which typically involves departures and buybacks. Rights have nothing to do with it.

A former employee said that Musk uses this method to control employees and cannot make radical remarks even after leaving. Translated by this site, the employee disclosed the following:

Even if you pay thousands of dollars in taxes and fees, since SpaceX is not eager to go public, being prohibited from participating in the tender offer means that it will be very difficult in the future. The value of your holdings over a long period of time is zero.

When you leave, they will force you to sign a non-disparagement agreement with a carrot and a stick (if they have a stick).

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