Elon Musk to hold Tesla shareholder vote to incorporate in Texas, after Delaware judge rules against Musk’s pay package
Elon Musk on Wednesday has confirmed that a Tesla shareholder vote will be held “immediately” for incorporating the EV maker in Texas, instead of Delaware.
On Tuesday the Delaware judge Kathaleen McCormick had annulled Elon Musk’s $56 billion pay package granted in 2018, after ruling that Tesla’s board of directors had failed to prove “that the compensation plan was fair” or show much evidence that they had even negotiated with him.
It comes after a lawsuit filed by Richard Tornetta, a Tesla shareholder who argued that directors had breached their fiduciary duties by awarding Elon Musk a performance-based equity-compensation plan.”
The pay package that Tesla had granted Musk was the largest compensation plan in public corporate history, the judge noted.
It also allowed Elon Musk to become the world’s richest man.
Musk can appeal the decision to Delaware Supreme Court, but immediately after the ruling Musk posted “never incorporate your company in the state of Delaware.”
Delaware is a favourite US state for firms to register in, as it is known for having light taxation.
Musk then later tweeted a poll that asked the question: “Should Tesla change its state of incorporation to Texas, home of its physical headquarters?”
The poll saw 87.1 percent of respondents vote for Tesla to change its state of incorporation to Texas.
Soon after Musk tweeted that a shareholder vote would be held “immediately.”
“The public vote is unequivocally in favor of Texas!,” he tweeted. “Tesla will move immediately to hold a shareholder vote to transfer state of incorporation to Texas.”
The public vote is unequivocally in favor of Texas!
Tesla will move immediately to hold a shareholder vote to transfer state of incorporation to Texas. https://t.co/ParwqQvS3d
— Elon Musk (@elonmusk) February 1, 2024
Last week Elon Musk had reiterated his desire for 25 percent voting control of Tesla.
A 25 percent holding would be almost double Musk’s 13 percent stake currently held in Tesla.
It should be remembered that Musk did hold more than a 20 percent stake in Tesla before he sold a large number of shares in order to purchase Twitter (now known as X).
Elon Musk has made no secret of expressing his dislike for certain US states, most notably California.
In 2020 Musk had threatened to move both the Tesla factory and its headquarters out of California altogether, to Texas or Nevada, after he clashed with officials in Alameda County over the re-opening of Tesla’s factory during the first Californian Covid-19 lockdown.
His threat to pull the factory of the world’s most valuable carmaker out of California was not realised, after Musk was allowed to re-open the Fremont factory early.
But in October 2021, Elon Musk followed through on his warning, and moved Tesla’s corporate headquarters to Texas.
In December 2020, Elon Musk, who had lived in Los Angeles for 20 years, announced he had left California after he had sold his Bel Air homes.
Musk personally relocated to Texas.
In December 2021 Musk said on a podcast that California was “doing everything it can to encourage people to leave,” and he joked that u-hual was doing great business in the US state.
He also slammed California for ‘overtaxation’ and ‘overegulation’ and ‘overlitigation’.