SpaceX employees cannot sell stocks if they breach company policies
What's the story
SpaceX imposes unique conditions on its employees' stock awards, leaked internal documents viewed by TechCrunch have revealed.
This includes the company's right to buy back vested shares within six months of an employee leaving, regardless of the reason for departure.
Additionally, SpaceX can prohibit former and current employees from participating in tender offers, if they are found guilty of dishonesty or violating company policies.
Scenario
Employee awareness and impact of stock restrictions
Many employees are reportedly unaware of the "dishonesty" clause when they initially sign up on the equity compensation management platform.
If SpaceX bars an employee from selling stock in tender offers, they would have to wait until the company goes public to cash in their shares.
However, it remains uncertain when or if SpaceX will go public.
What's more?
Tax implications and stock buyback events
SpaceX employees are required to pay taxes on their shares, similar to most tech companies.
Unlike public firms, private company stock cannot be sold without the company's permission.
Employees can convert that portion of their salary into cash only when permitted to do so by their employer.
SpaceX is known for holding buyback events twice a year, providing biannual opportunities for employees to liquidate assets that have likely appreciated since vesting.
Insights
Repurchase rights and employee concerns
SpaceX has the right to repurchase an employee's stock for $0 per share if they are fired "for cause," according to internal documents.
This unusual provision has been described as a way for the company to maintain control over employees, even after they have left.
Being banned from tender offers could effectively nullify an employee's shares, especially given SpaceX's lack of urgency to go public.
Facts
SpaceX's risk factors and Elon Musk's influence
SpaceX provides employees with a document outlining the risks of investing in the company's securities.
The document highlights various risk factors, including the seismic activity of Hawthorne, California, where its headquarters is located.
It also mentions that the company's market capitalization could be influenced by CEO Elon Musk's actions or public statements.
The document further notes that there may never be a public market for SpaceX's common stock, posing a risk for employees barred from tender events.