Corporate Governance Rockets to Top of Shareholder Concerns

Elon Musk’s SpaceX pulled off a record-setting IPO on June 11, but the debut had at least one pre-launch hiccup. The day before SpaceX went public, index provider MSCI assigned the much-discussed rocket maker a CCC rating—the lowest grade on its seven-tier sustainability scale and the same one it gives Russia. One analyst at Edhec’s Climate Institute called it “very close to a governance horror story for public-market investors.”

Many concerns about SpaceX center on shareholder power, or the lack of it. For stockholders, SpaceX does not offer “one share, one vote,” the longstanding principle that ties voting weight to ownership stake. (In fairness, that’s part of a broader trend: the share of IPOs with unequal voting rights climbed to 20% last year, up from 9% two decades ago.) A second set of issues are the severe restrictions that SpaceX’s bylaws place on shareholder litigation. They mandate individual private arbitration and prohibit class actions, among other things. Bloomberg’s Matt Levine put it bluntly, noting that Musk has total control and effectively can’t be sued or second-guessed by shareholders.

While SpaceX has drawn attention to certain governance issues, the perceived governance issues extend well beyond SpaceX. Indeed, governance has become the dominant category of shareholder proposals, especially with DEI fights on the wane. Fenwick & West attorneys have clocked a phenomenon they describe as “DEI fatigue,” marked by a broad decline in support for both pro- and anti-DEI measures. Attention has shifted to AI governance, data privacy, political spending, and, above all, the mechanics of who gets a vote. Governance-related proposals made up 51% of all submissions through mid-May, and governance was the only proposal category to grow this year.

Voting figures tell a more nuanced story. Even as volume rose, average backing for governance proposals dropped to roughly 29% at S&P 500 companies, down from nearly 40% in 2025, and the number clearing a majority fell sharply. Independent chair proposals were the single most common governance ask, yet all of them failed this year. Dual-class structures received increased scrutiny, with eight proposals seeking to break out voting results by share class—a direct response to super voting arrangements of the kind SpaceX has.

And the proposals that do pass are worth noting. At Snowflake, shareholders approved a proposal asking the company to require a majority vote for director elections. Their proposal quoted BlackRock in arguing that majority voting “ensur[es] that directors who are not broadly supported by shareholders are not elected to serve as their representatives.” At Five Below, meanwhile, investors backed a simple-majority voting standard, targeting supermajority provisions that ISS calls “materially adverse to shareholder rights.” Similar measures found success elsewhere: Nvidia holders approved a proposal to eliminate a supermajority requirement, and HubSpot shareholders won the right to call special meetings.

The broader implication is that governance mechanics including voting rights, board accountability and shareholder remedies are becoming a more prominent area of investor engagement. For companies with atypical governance structures such as concentrated control or heightened voting thresholds, this proxy season suggests that investors are placing renewed emphasis on governance fundamentals and should expect continued scrutiny—even if proposals do not receive majority support.

The message for boards is hard to miss: basic concerns about corporate governance are back at the top of the agenda, even if one notable exception has rocketed past them.

—

Don’t just read about the trends — leverage them. Explore Intelligize with a free trial and unlock the tools professionals rely on every day.