SpaceX, X (formerly Twitter), and Tesla CEO Elon Musk in a live interview with Ben Shapiro at a symposium on combating anti-Semitism held in Krakow, Poland on January 22, 2024. talk.
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Elon Musk said late Wednesday. tesla plans to hold a shareholder vote on whether to move the electric vehicle maker’s legal status to Texas.
Through a straw poll on X (formerly Twitter), the billionaire asked his followers whether Tesla should change its state of incorporation to Texas, where its physical headquarters are located. More than 80% of those who voted answered “yes.” Polls on social media platforms are unofficial and cannot be compared to professional polls.
After the vote, Musk said Tesla “intends to immediately conduct a shareholder vote to relocate its corporate status to the state of Texas.” Mr. Musk would likely need approval from Tesla’s board of directors to carry out such a move. Tesla is currently incorporated in Delaware.
Musk’s X post came after a Delaware judge invalidated a $56 billion compensation plan awarded to Tesla’s CEO in 2018, the largest compensation plan in the history of a public company. Treasury Tribunal Chief Justice Kathleen McCormick ruled that the company’s board had failed to prove “that its remuneration plan was fair” and had not presented much evidence that it had negotiated with Mr. Musk.
Musk then expressed his disgust with the state.
“Never set up a company in Delaware,” Musk posted on X this week.
CNBC asked Eric Talley, a professor at Columbia Law School, why Musk would want to do this and why shareholders would prefer Tesla to reincorporate in Texas.
For one thing, he said, Texas is lax about paying CEOs large sums of money without liability. If Tesla reincorporates there, the board could potentially decide to give Musk a “thank you” bonus without following Delaware’s fiduciary standard. Based on these criteria, the court ruled that the company should cancel Musk’s 2018 pay package.
But Talley said the decision to reincorporate itself could be challenged by shareholders as “a choice made for Musk’s self-interest,” and thus while Tesla is still subject to Delaware law. pointed out that it could be challenged as a breach of fiduciary duty.
— CNBC’s Dan Mangan contributed to this report.
