9 months ago
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Image source, Getty Images
By Mariko Oi
Business reporter
Elon Musk says Tesla will move immediately to hold a shareholder vote on shifting the firm's legal home from the US state of Delaware to Texas.
It comes after a judge in Delaware annulled Mr Musk's $55.8bn (£44bn) Tesla pay package.
After the ruling, he posted on social media: "Never incorporate your company in the state of Delaware."
Many big firms, including Amazon, are registered in Delaware, which is known for having light taxation.
This week, Judge Kathaleen McCormick found Tesla directors, who negotiated the pay package in 2018, were "perhaps starry eyed" due to Mr Musk's "superstar appeal" and did not fully inform shareholders.
She said the deal was "unfathomable" and ruled it should be cancelled.
The pay deal was the biggest to date in US corporate history, helping to make Mr Musk the richest person in the world.
Bloomberg and Forbes estimated his net worth to be between $198bn and $220bn, in November 2023.
Tesla's package tied Mr Musk's compensation to performance targets, such as the firm's share price and profitability, but he does not receive a salary.
The lawsuit was filed by a shareholder, Richard Tornetta, who argued that it was an overpayment.
Despite owning just nine Tesla shares, Mr Tornetta launched legal action calling for the award to be rescinded.
Following the ruling, Mr Musk launched a poll on his social media platform X, formerly Twitter, asking if Tesla should change its state of incorporation to Texas.
The poll had more than 1.1 million votes with over 87% voting in favour of the change.
"The public vote is unequivocally in favor of Texas!," Mr Musk posted on X.
The electric car maker moved its corporate headquarters from Palo Alto in California to Austin, Texas in 2021.
It came after Mr Musk had voiced criticism of California's tax policies and regulation.
He had also clashed with officials at the beginning of the Covid-19 pandemic after reopening a factory in Fremont.
Tesla has an electric car "gigafactory" in Texas, which the firm is planning to expand.
The pay ruling by Judge McCormick is not the first setback Mr Musk has had in Delaware.
The same judge oversaw Twitter's lawsuit in July 2022 after he tried to back out of a contract to buy the company for $44bn.
She rejected his arguments and Mr Musk went through with the deal to buy Twitter, which is now known as X.
English (US)