The $85 billion listing last month of SpaceX, Elon Musk's aerospace, satellite communications and artificial intelligence company, was an important market event. It was also an important statement on corporate governance.
The company's dual-class share structure, conferring disproportionate voting power on its founder, could be expected to serve as a template for the next wave of high-profile IPOs, with OpenAI and Anthropic expected to follow suit in the coming quarters. The pitch is familiar: concentrated control frees founders from the tyranny of quarterly earnings and enables long-horizon investment in research, product and scale.
That argument deserves to be taken seriously. Innovation does require patience, and public markets too often reward near-term certainty over long-term value creation. But dual-class structures are also lock-in mechanisms. Investors may trust today’s founders; future leadership, however, is unknown. The question is not whether you want entrenched control now, it is whether you still want it after succession, strategic drift or a company crisis.
Academic research suggests that any valuation premium associated with dual-class structures often fades over time, while sustained insider control can encourage executives to pursue their own interests over shareholders’—through value-destructive acquisitions, misaligned pay or empire-building—while making it costly and difficult for shareholders to intervene. Governance should be designed to deal with the full range of uncertain outcomes, not just for the base case.
Balance of Power Shifts from Active Owners
This governance inflection point comes at an awkward moment. Proxy season has unfolded against a backdrop of shifting federal rulemaking and an increasingly competitive U.S. state incorporation landscape, one that has materially shifted the balance of power away from active owners and toward management teams and their boards. This regulatory pivot from shareholders to management coincides with large passive investors scaling back stewardship capabilities, effectively relinquishing one of ownership’s most important tools for protecting long-term client value.
In our view, this is not a moment for investors to retreat from stewardship. Periods of technological disruption, policy change and concentrated market exposure make active ownership more important, not less. The market’s pile-on dynamic cuts both ways: passive flows amplify momentum upward, but intensify drawdowns when sentiment turns.
Active ownership—engaged boards, credible accountability mechanisms and investors willing to test assumptions—acts as a stabilizer. And as changes in state incorporation laws and the rise of specialist business courts create greater uncertainty around shareholder rights, the distinction between what is legally permissible and what constitutes best practice has rarely been more important.
Pro-Shareholder Trends Are Increasing Outside the U.S.
A useful counterpoint to U.S. trends is Japan, where governance reform has moved from aspiration toward implementation—driven by Tokyo Stock Exchange pressure to improve capital efficiency, revise the Corporate Governance Code and sustain global investor engagement. Furthermore, a growing focus on board independence, cross-shareholding unwinds, and more disciplined capital allocation through dividends and buybacks have collectively pushed companies in a more shareholder-positive direction.
Progress remains uneven, but the direction is clear. The contrasting trends in the U.S. and Japan underscore a core principle: legal frameworks and market norms can either reinforce accountability or erode it, depending on how investors, regulators and companies respond.
An instructive example in the U.S. comes from several large alternative asset managers—firms built with founder influence and governance structures that historically insulated control—who have navigated generational transition and moved toward one-share, one-vote frameworks. The most deliberate of these transitions involved a multiyear sunset provision established by co-founders to enable an orderly shift from founder control to best-in-class governance. We have strongly supported that process. As SpaceX, OpenAI and Anthropic approach public markets, this model offers a compelling template for the direction they should ultimately strive toward, in our view.
Public Ownership Comes With Responsibilities
Once a company is public, governance gaps tend to be hard to close. This proxy season has surfaced the full spectrum of those risks in practice. We have supported shareholder proposals calling for dual-class sunsets, voted against compensation programs that embed high-vote share grants—further entrenching the misalignment between economic ownership and voting control—and opposed directors who, without seeking shareholder approval, have unilaterally adopted bylaw amendments that materially limited shareholder rights.
Where companies combine multiple governance shortcomings—low board independence, supermajority vote requirements and multi-class share structures—the cumulative effect on minority shareholder protection can be significant and self-reinforcing.
As IPO activity rebounds, a key investor question is: are the rules of the corporation designed to protect and enhance long-term value for all shareholders, including in the hands of the next generation of leadership? The durability of this IPO cycle will depend not only on market enthusiasm, but on whether newly public companies are built for the responsibilities of public ownership—with governance structures that preserve minority shareholders' ability to vote on meaningful issues, hold boards accountable and seek redress when those rights are undermined. If a company desires the benefits of public shareholder capital, it owes the public a responsible governance structure.
What to Watch For
Monday 07/13:
- China Trade Balance
Tuesday 07/14:
- U.S. Core Consumer Price Index
- U.S. Consumer Price Index
- China GDP
Wednesday 07/15:
- Eurozone Industrial Production
- U.S. Producer Power Index
- U.S. Beige Book
- Canada BoC Interest Rate Decision
Thursday 07/16:
- U.K. GDP
- Eurozone Trade Balance
- U.S. Retail Sales
- U.S. Initial Jobless Claims
- U.S. Philadelphia Fed Manufacturing Index
Friday 07/17:
- Eurozone Consumer Price Index