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Elon Musk Proposes Tesla’s Shift to Texas Amid Legal Challenges


Tesla CEO Elon Musk has announced plans to seek shareholder approval for relocating the electric carmaker’s legal headquarters from Delaware to Texas. This decision comes in the aftermath of a Delaware judge invalidating Musk’s $55.8 billion Tesla pay package, calling the deal “unfathomable” and suggesting that directors may have been swayed by Musk’s celebrity status.

In response to the ruling, Musk took to social media, advising against incorporating companies in Delaware and expressing his intention to initiate a shareholder vote on moving Tesla’s legal domicile. Delaware is known for its business-friendly environment and tax advantages, attracting numerous major corporations, including Amazon.

Judge Kathaleen McCormick’s ruling stated that Tesla directors did not adequately inform shareholders when negotiating Musk’s record-breaking pay package in 2018. The decision declared the deal null and void, deeming it a product of undue influence.

The pay package, the largest in U.S. corporate history, linked Musk’s compensation to performance metrics, such as Tesla’s share price and profitability. Despite holding just nine Tesla shares, shareholder Richard Tornetta filed the lawsuit, arguing that the payout was excessive.

Following the legal setback, Musk conducted a poll on his social media platform, X (formerly Twitter), asking if Tesla should change its state of incorporation to Texas. The poll garnered over 1.1 million votes, with more than 87% supporting the relocation.

“The public vote is unequivocally in favor of Texas!,” Musk stated on X.

Tesla had previously shifted its corporate headquarters from Palo Alto, California, to Austin, Texas, in 2021. Musk cited dissatisfaction with California’s tax policies and regulations as reasons for the move. The entrepreneur has been critical of the state’s approach, and earlier clashes occurred during the initial stages of the Covid-19 pandemic when he reopened a factory in Fremont.

In addition to its headquarters, Tesla has a significant presence in Texas, with an electric car “gigafactory” in the state. The company is planning to expand its operations in Texas, making the state a pivotal hub for Tesla’s activities.

This legal setback in Delaware is not the first time Musk has faced challenges in the state. Previously, Judge McCormick oversaw a lawsuit related to Musk’s attempt to back out of a contract to purchase Twitter for $44 billion in July 2022. Despite Musk’s objections, the judge upheld the contract, leading to the acquisition of Twitter, now known as X.


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