Elon Musk has announced that Tesla will swiftly initiate a shareholder vote on relocating the company’s legal headquarters from Delaware to Texas.
This decision follows a Delaware judge invalidating Musk’s $55.8 billion Tesla pay package. In response to the ruling, Musk advised against incorporating companies in Delaware.
Many major corporations, including Amazon, are registered in Delaware due to its favorable tax environment.
The judge, Kathaleen McCormick, concluded that Tesla directors, influenced by Musk’s “superstar appeal,” did not adequately inform shareholders about the pay package negotiated in 2018.
She described the deal as “unfathomable” and ordered its cancellation. This pay agreement, the largest in US corporate history, contributed to Musk becoming the world’s wealthiest individual.
The compensation package linked Musk’s pay to performance metrics like Tesla’s share price and profitability, without involving a salary.
The legal challenge came from shareholder Richard Tornetta, who, despite owning only nine Tesla shares, argued that the award was excessive.
After the ruling, Musk conducted a poll on his social media platform X (formerly Twitter), asking whether Tesla should change its state of incorporation to Texas.
The poll received over 1.1 million votes, with over 87% supporting the change.
Tesla had previously moved its corporate headquarters from California to Texas in 2021, a decision influenced by Musk’s criticism of California’s tax policies and regulations.
Source-BBC
