Musk Says Tesla Will Hold Shareholder Vote Over Texas Incorporation

A poll on X, launched by Tesla CEO Elon Musk, suggested that the company should move to be incorporated in Texas, where the company headquarters are.

The poll was prompted by a Delaware court decision that voided Musk’s Tesla compensation package of a sizeable $55 billion.

The compensation package was agreed upon by Tesla’s board in 2018 and was challenged in court by a shareholder who argued the record size of the compensation featured problems such as conflicts of interest and misleading disclosures by Tesla, per Bloomberg.

The package was the largest executive pay plan in history and allowed Musk to buy Twitter last year. Now, this fortune is in limbo, reducing Musk’s net worth to $154.3 billion from over $200 billion.

According to the Delaware judge, Musk had had too much influence over the size of his compensation package. “The most striking omission from the process is the absence of any evidence of adversarial negotiations between the board and Musk concerning the size of the grant,” she wrote.

As is his habit, Musk took to X to vent his feelings about the court’s ruling, advising his audience to “Never incorporate your company in the state of Delaware.” He went on to put up a poll on whether Tesla should reincorporate in Texas. An overwhelming majority of 87.1% voted in favor of the move.

In response, Musk wrote that “Tesla will move immediately to hold a shareholder vote to transfer state of incorporation to Texas.”

Musk moved Tesla’s headquarters from California at the end of 2021. Among the motives for the move, Musk cited expensive real estate in the Bay Area, which was a burden for Tesla employees. However, a much bigger problem was the different attitudes Musk and the California government had towards the pandemic.

The Tesla CEO vocally disagreed with California’s lockdown decisions and even threatened to move all of the company’s operations away from the state. He dialed down the rhetoric eventually, moving only the headquarters of the electric vehicle maker to Austin, Texas.

By Charles Kennedy for Oilprice.com

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