What financial benefits should look like after a mega-IPO like SpaceX’s

When SpaceX went public on June 12, some 4,400 employees were expected to become millionaires, according to an analysis shared on X by the founder of Hill Markets, an investment platform.

Now that SpaceX has officially debuted with the biggest IPO in history, employees that have amassed equity in the company over the years have to figure out what to do with shares worth millions of dollars.

Employers can offer a variety of benefits to support workers with equity after a major liquidity event like this, sources told us. In addition to helping employees manage a windfall of new wealth, HR teams have to consider how to retain these workers, as well.

The most pressing questions for employees. When a company goes public, “the IPO itself is actually the starting gun, not the finish line,” Nick Avery, chief people officer with Carta, a platform for managing private capital, told HR Brew via email.

Employees with equity will have to consider the following, according to Avery:

• Timeline to sell. Companies typically institute lockup periods ranging from 90 to 180 days, during which employees are restricted from selling their shares. Blackout windows may also affect when workers can sell.
• Tax implications. When restricted stock units (RSUs) vest, they’re taxed as ordinary income, Avery said. Incentive or non-qualified stock options are treated differently when they’re exercised, versus when they’re sold. “Getting this wrong is expensive,” he added.
• Concentrated position. If the majority of an employee’s net worth is suddenly concentrated in one stock, this represents “a real risk management problem most employees haven’t faced before.”
• The broader financial picture. Employees have to consider how this wealth will affect areas such as estate planning, charitable giving, and retirement strategy, Avery said.

Employers typically offer a range of benefits to help employees navigate these and other financial questions that arise after an IPO, Avery said. Financial education is table stakes, with companies offering equity literacy programs that explain how different types of equity compensation work, how it’s taxed, and how lockups work, for example. “These can be webinars, on-demand content, or manager-led conversations,” he said.

If an HR team wants to consider financial benefits that go further than this, they can also look into specialized financial guidance geared toward employees affected by equity compensation and liquidity events, Avery added. Employer-paid tax guidance can make a real difference, too, he said.

Morgan Stanley at Work is typically “actively engaged” with clients on these issues one year in advance of an IPO, Kate Winget, its chief revenue officer, said. Education sessions focus on everything from budgeting “all the way into generational wealth creation, tax implications, trust and estate training.”

She added that employees often need financial support beyond the moment of the IPO, as a company’s stock price will fluctuate after the first day of trading, further affecting workers’ equity. “It’s in the months and even the years post-IPO, that you want to make sure that [you’re] supporting those employees with their questions, their planning,” she said.

SpaceX didn’t respond to a request for comment about the financial benefits it offers to employees navigating questions about equity, but it appears workers were ahead of the curve before the IPO occurred. More than 1,000 employees got together to negotiate with wealth management firms for lower-cost financial advice ahead of their windfalls, Bloomberg reported on June 2.

Keeping workers happy. It’s not every day that thousands of employees get rich off of one IPO, though if OpenAI and Anthropic go public in the near future as expected, we could see more examples of this.

Will this sudden influx of wealth prompt employees to jump ship? Research suggests departures of high-earning employees tend to increase after an IPO, but COO Gwynne Shotwell said she doesn’t believe that will be the case at SpaceX. “There’s already a lot of folks working at SpaceX that are quite wealthy and they’re still working,” she told CNBC on June 12. “Those that don’t want to work shouldn’t be at this company anyhow.”

Both Avery and Winget said continuing to offer employees equity in the company can be an effective retention lever, even after it goes public. “It is still very attractive for employees to be financially invested in [a] company that’s growing,” Winget said.

Going from private to public typically makes companies “more bureaucratic, slower-moving,” Michael Ewens, a finance professor at Columbia Business School who co-directs the private equity program, said.

“I suspect many of the early employees of SpaceX work there because they like the culture, the speed, the innovation. So, if I was running SpaceX, I would also…commit to continuing to be innovative and take on risks with investments, so that those employees that you had early on are in an environment they still want to work [in].”