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David Paul Morris/Bloomberg/Getty Images
A Tesla store in Colma, California, on December 13, 2023
cnn
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Stung by a Delaware court ruling earlier this week that voided his record pay package for Tesla, Elon Musk says he is seeking shareholder approval to incorporate the company in Texas.
Shortly after Tuesday decision Regarding his 2018 pay package, valued at around $51 billion at current stock prices, Musk presented a survey in X asking if Tesla (TSLA) should move your Delaware registration to Texas, where it is already with headquarters.
Hours later, Tesla’s CEO wrote that “the public vote is unequivocally in favor of Texas.” Poll results showed that Texas had won the support of more than 87% of approximately 1.1 million votes.
Musk added that he will now “immediately” seek shareholder approval to incorporate the electric car maker in the southern state.
Delaware It is famous for being one of the most welcoming places in the world for companies of all types and sizes to incorporate for legal and tax purposes. Almost 70% of Fortune 500 companies are incorporated there.
It is considered a desirable place to seek approval for mergers and litigate disputes, and does not impose sales taxes or taxes on profits from intellectual property.
While Musk has not commented directly on the ruling regarding his pay package, he has tweeted Tuesday: “Never incorporate your business in the state of Delaware.”
“I recommend incorporating in Nevada or Texas if you prefer to let shareholders decide matters,” he said in another cheep.
Lawyers for Tesla shareholders who filed the lawsuit argued that the stock option package was excessive and that the company’s directors were too close to Musk to protect his interests.
The 303 million split adjusted stock options Musk had received as part of the package are worth $51 billion today, when calculated using Tuesday’s closing price, minus the modest strike price of $23.34 per share.
Kathaleen McCormick, chancellor of the Delaware Court of Chancery, who oversaw the court trial that concluded in November 2022ruled Tuesday that Musk and Tesla’s board of directors “bear the burden of proving that the compensation plan was fair and failed to meet their burden.”