Elon Musk, CEO of Tesla, stated on Thursday that he aims to present a proposal for shareholder voting to transition the company's incorporation from Delaware to Texas. Previously, Musk inquired among his followers, previously known as 'Twitter,' if Tesla should shift its incorporation status to Texas. A substantial chunk, 87.1%, out of 1.1 million respondents supported Musk's proposal.
Musk announced the conclusive decision by posting, "The public vote is unequivocally in favor of Texas! Tesla will move immediately to hold a shareholder vote to transfer the state of incorporation to Texas." This statement follows the previous roadblock Musk faced when Kathaleen McCormick, Chancery Court Chancellor, invalidated Musk's nearly $56 billion compensation package. She cited the inability of Tesla's board to showcase evidence of fairness in Musk's pay package or indeed, provide evidence of discussion over the package with Musk.
In response to this ruling, Musk stated, "Never incorporate your company in the state of Delaware". He suggested that companies should consider incorporating in Nevada or Texas, where shareholders have more decision-making power.
Delaware is recognized for housing more than 65% of Fortune 500 firms, largely due to its conducive legal and tax policies for businesses, as per Harvard Business Services. However, a Reuters report warns that Musk's proposed move could spark investor lawsuits, as it appears to be more beneficial to him than to Tesla.
In 2021, Tesla relocated its corporate offices from Palo Alto, California, to Austin, Texas, owing to regulatory conflicts with the state and disputes over the reopening of the Fremont facility.
