SpaceX investors say the rocket company uses a 'very smart' internal stock market to keep workers happy despite long hours and 'mediocre' salaries

  • A private investor in SpaceX said the rocket company founded by Elon Musk was in the middle of an internal tender offer for its employees.
  • Employees can gradually buy vested stock in SpaceX. Staff get a 10% discount on the latest strike price, a former employee said.
  • But to keep tight control of the company’s shareholders, SpaceX uses an internal stock market, according to an investor. The private exchange matches up employee shareholders with approved investors.
  • SpaceX makes no money off such internal tenders, the investor said, but the system motivates staff with options to keep working hard for the rocket company. 
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Startup jobs are known for grueling hours and laughable work-life balance. For many employees at SpaceX, the stereotype seems to fit. After all, staff are toiling to make real the dream machines of Elon Musk, the rocket company’s founder, CEO, and chief designer, and then launch them into space on aggressive timelines.

But for all of their labor, expertise, and magic making within the space industry, people who say they’re SpaceX employees in anonymous reviews on the job site Glassdoor frequently cite wages as a negative. Some of them have described SpaceX’s salaries as “underpaid,” “minimal compensation,” and “lowest pay in the industry.”

So how does SpaceX keep its about 6,000 employees sticking with the company, aside from Musk’s charisma and vision?

“The stock options are incredible,” a person who said they worked as a supply-chain engineer at the company wrote in a Glassdoor post in December. “My salary is mediocre, but I’m pretty confident I will leave this company with a small fortune.”

While stock-option compensation at a Silicon Valley-style startup is no surprise, one outside investor in SpaceX said the company has a “very smart” way of giving employees liquidity. (Business Insider verified his identity, but he requested anonymity for fear of reprisal.)

He said SpaceX’s employee-shareholder-facing financial system — what the Los Angeles Times once described as an “internal stock market” — not only helps out staff get paid above and beyond their salary and keeps them working hard but also gives SpaceX precise control over people who own pieces of the company. The latter is of tantamount importance to Musk, who has an audacious vision of “enabling human life on Mars” with SpaceX and indicated on several occasions that he wouldn’t sell the company until that happens.

Right now, SpaceX is in the middle of using that internal-tender system to put more money in the pockets of employees, the investor source said, adding that the company boots it up about twice a year.

“They facilitate the process, and they do not make any money off of it,” he told Business Insider. “But any large company that wants to retain their top employees should do this. There is no benefit in terms of capital to the company, but the retention factor is huge.”

How SpaceX employees get company stock

Employees at SpaceX’s headquarters in Hawthorne, California.
Jonathan Newton/The Washington Post via Getty Images

Getting SpaceX shares for an employee isn’t too different from how other startups handle stock-option plans.

SpaceX typically offers every full-time staff member the option to participate in its employee-stock-purchase program. This allows workers to buy a small amount of stock as it vests, usually over four years, according to a former employee, who described the company’s stock program to Business Insider after he was laid off in January 2019. (Business Insider verified his identity, but he was granted anonymity to protect his privacy.)

Workers can buy shares out of their paycheck for 10% off the going price as they vest, but SpaceX permits no more than 15% of pay to go toward purchasing options, the former employee said.

Higher-level employees are also offered incentive stock offerings of varying amounts; typically, the higher an employee’s position is on the company ladder, the more shares they’re offered. The investor said executive-level employees could gain access to hundreds of thousands or millions of dollars’ worth of options. Employees still have to purchase the shares at the going rate, though, so the investment can be significant and risky, the investor said.

“You can see your stock go up, but it can also go down. You’re not guaranteed a return on it,” he added. 

But at SpaceX, the trend has been much like its rocket flights: up and up and up. In 2013, the former employee said he was offered several hundred shares that were worth about $2 each at the time. When he was laid off and offered a chance to finish purchasing his remaining options, those shares were each worth more than 100 times as much.

“Based on what Elon is doing right now, based on putting a constellation of satellites around the globe for high-speed low-cost internet for everyone, and also our Mars ship — our stock could possibly go up to $500 or $600 a share,” he said. “That would be a good retirement for me.”

The employee was referring to two of SpaceX’s biggest private projects: Starlink and Starship.

Starlink hopes to surround Earth with up to 42,000 satellites — five times the objects humanity has every launched to orbit — and bathe the planet in web access. Musk estimated the system could gross SpaceX tens of billions of dollars a year. Starship, meanwhile, is a planned steel rocket system that would be fully reusable. If realized, Starship threatens to make obsolete much of the rocket industry, which for decades has relied on single-use launchers, by making travel to space hundreds of times, if not 1,000 times, cheaper.

Many employees are choosing not to sit on their shares and sell what they can, the investor said. Los Angeles County, where SpaceX is headquartered, isn’t a cheap place to live, and the investor said a surge of cash could go a long way toward a down payment, paying off a mortgage, or buying in to a retirement fund.

But the anonymous investor said the company didn’t let employees sell to anyone at any time: It uses an internal “matchmaking service” with vetted investors to get employees cash for their options.

How SpaceX’s internal stock market works

A mock-up of SpaceX’s Crew Dragon spacecraft for NASA astronauts.
Robyn Beck/AFP via Getty Images

Employees could try to sell their shares on their own, such as through a broker. But because SpaceX is not a public company, and its shares come with a right of first refusal, the company’s board of directors can kill a private sale.

“I’ve contacted a company that offers secondary sales, but they said that in the past, SpaceX would not allow secondary sales of shares,” a Reddit user who said they were a former SpaceX employee wrote in 2019. “Just super confused and frustrated.”

Such comments underscore another incentive for sticking with SpaceX: Even if an employee quits with a nest egg of vested shares, they can’t really do anything with them — at least legally — until SpaceX either buys them back or the company goes public, which may not happen for decades. What creates that retention value is SpaceX’s decision to launch its own internal exchange, the investor said. The system is structured to give employees the ability to sell part of their vested shares on a biannual basis with some limitations, the investor added.

“Normally they allow 10% or up to $1 million. If you have $10 million worth of stock, say from an early employee or higher-level employee, they don’t want you to cash out and leave,” the investor said.

He added the strike price was set by the latest fundraising round reported to the Securities and Exchange Commission and that the price never goes higher to avoid public filings that may affect SpaceX’s valuation. According to PitchBook, a service that tracks startup financials, the last price — based on a $314 million fundraising round that began in June — was $214.

It’s up to employees to decide how much of their vested stock they want to sell through the system. But according to the investor, all the stock that is offered gets snatched up, as does stock offered in fundraising rounds.

“They always succeed,” the investor said. “In the past five or six years, they’ve always hit their target number.”

Once SpaceX has a handle on which employees are selling what, they approach investors — but only trusted parties already in the company’s capitalization table, or cap table. Top investors get first pick as to how much they’d like to buy, then SpaceX work its way down the list.

“They get people like me who are previous investors, which doesn’t change the cap table,” the investor said. “From a company perspective, they don’t want their guys leaving and trying to sell the stock to other players. They want to control that process. It’s very smart. SpaceX kind of controls the market.”

‘They’re the most in-demand private stock that exists’

An illustration of SpaceX’s planned Starship rocket landing near a moon base.

A second anonymous investor in SpaceX, who backed up some details included in this story, said SpaceX was in a very powerful position in regard to its stock. (Business Insider also verified his identity, but he requested anonymity for fear of reprisal.)

“They’re SpaceX, so they can do almost whatever they want — they’re the most in-demand private stock that exists. They don’t have to do things the way things are traditionally done,” the second investor told Business Insider.

He added that there was so much demand in part because of its exclusivity but also because the sky is not the limit for where the company may go beyond its rocket-launch and internet-satellite businesses.

“You’ve also got all these unknowns, like, ‘What is the value of a company that is managing a planet?’ That’s the fun part to think about,” the second investor said, referring to SpaceX’s hope to control of the rocket-launch industry and Mars-habitation plans. “But even with the stuff we do know, the business case closes.”

It’s uncertain how much stock employees are trying to sell because the internal tender has not yet closed, the first investor said. But he added “this one is weird” because SpaceX’s internal tenders are — as of late — typically associated with a primary fundraising round.

Both investors said SpaceX’s internal tenders didn’t net the company any money; if anything, they costs it. But the price of playing matchmaker is likely worth it, and he said similar practices were “becoming more common practice with late-stage companies, where the stock has appreciated significantly.”

“It’s work for them,” the first investor said, but “a tender offer at last round’s pricing makes employees happy.”

Do you have a story to share about SpaceX or other space companies? Send Dave Mosher an email at or send him a Twitter direct message to @davemosher. You may also consider more secure communication options listed here.

Meghan Morris contributed reporting to this story.

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