Updated Feb 1, 2024, 01:55am ESTTopline
Tesla CEO Elon Musk announced on Thursday that the company will soon hold a shareholder vote to relocate its state of incorporation to Texas, following a public dispute with Delaware, where the company is currently incorporated, regarding a court ruling that voided Musk’s $55.8 billion pay package.
hold a shareholder vote to transfer the company’s state of incorporation to Texas.Visual China Group via Getty Images
Key Facts
Musk expressed the intention for an immediate vote without specifying the exact date.
Musk referred to a poll on his X account, indicating that the “public vote” heavily favored Texas as the new state of incorporation.
An informal poll conducted on Musk’s account received over 1.1 million votes, with 87% in support of the move to Texas.
Key Background
Recently, a Delaware judge voided Musk’s record $55.8 billion pay package from Tesla in response to a shareholder’s legal challenge. The plaintiff argued that the pay package unfairly disadvantaged shareholders, and the company’s board had failed in its fiduciary duty by approving it. In her ruling, Delaware judge Kathaleen McCormick highlighted Musk’s close ties with the board of directors, which was “tasked with negotiating” the pay package on behalf of Tesla. The ruling implies that Tesla’s board will need to devise a new compensation plan for Musk unless the company decides to appeal. Musk criticized Delaware in a tweet, stating, “Never incorporate your company in the state of Delaware.” Despite operating elsewhere, companies often choose Delaware as a state of incorporation due to its favorable tax benefits and corporate laws.
Tangent
This is not the first instance where Musk has relied on an X poll to make a significant business decision. Following the acquisition of X, previously known as Twitter, Musk has frequently turned to unscientific polls on the platform to make key policy decisions. In late 2022, the billionaire reinstated former President Donald Trump’s account on X after a poll. Later that year, Musk used another poll to ask followers if he should step down as the social media company’s CEO, with the majority voting in favor. While Musk presents these polls as a way to democratize important decisions, X’s informal polls are susceptible to manipulation by bots or fake accounts. Musk himself has acknowledged these issues when the results of these votes don’t align with his preferences.
Forbes Valuation
As per our estimates, Musk’s current net worth is $182.6 billion, ranking him as the world’s second richest person on the Forbes Real Time Billionaires list. The billionaire relinquished the title of the world’s richest to LVMH CEO Bernard Arnault after the Delaware ruling.
Further Reading
Elon Musk No Longer World’s Richest After Judge Voids $51 Billion Pay Package (Forbes)
Judge Voids Elon Musk’s $56 Billion Pay Package From Tesla (Forbes)
Follow me on Twitter. Send me a secure tip.I am a Breaking News Reporter at Forbes, with a focus on covering important tech policy and business news. Graduated from Columbia University with an MA in Business and Economics Journalism in 2019. Worked as a journalist in New Delhi, India from 2014 to 2018. Have a news tip? DMs are open on Twitter @SiladityaRay or drop me an email at siladitya@protonmail.com.Read MoreRead Less
