Elon Musk says Tesla shareholders will vote “immediately” on whether to change its legal status to Texas, shortly after a Delaware judge made a shocking decision to throw out his $56 billion compensation package. He said he plans to do so.
The mercurial tech billionaire made the announcement after conducting an informal poll of Company X regarding the possibility of a move.
Of the more than 1.1 million users who responded to the survey as of Thursday, an overwhelming 87.1% agreed that Tesla should move to Texas, with only 12.9% disagreeing.
“The people’s vote is unequivocally in favor of Texas!” Musk wrote of X, “Tesla will immediately hold a shareholder vote to move its legal status to Texas.”
Musk did not elaborate on his plans.
Tesla did not respond to a request for comment.
Tesla’s physical headquarters are already in Austin, Texas.
Musk moved the company’s headquarters to the Lone Star State in 2021 from its previous location in Palo Alto, California.
On paper, the electric car maker is registered in Delaware, a state that has long been seen as a good business environment.
Musk will likely need approval from Tesla’s board of directors to move forward with a vote on the incorporation change.
Delaware Court of Chancery Judge Katherine McCormick invalidated the pay package, which she described as “an incalculable sum” and found it excessive and unfair to the company’s shareholders.
The judge said the process by which Tesla’s board approved the package was “seriously flawed.”
After the court ruling surfaced, Musk lashed out at X, saying, “Never incorporate a company in Delaware.”
The lawsuit stems from a lawsuit filed by Tesla shareholder Richard Tornetta, who argued that the company’s 10-year compensation plan, loaded with stock-based incentives, was excessive.
The plaintiffs accused Tesla’s board of allowing Musk to develop a “fundamentally unchanged framework and financial terms.”
The pay package allowed Musk to earn 12 “tranches” of stock options tied to Tesla’s stock price performance over a 10-year period.
It’s worth noting that Mr. McCormick is the same judge who oversaw the legal battle between Mr. Musk and the former Twitter Inc., which Mr. Musk sued to try to back out of a deal to buy the company for $44 billion.
Musk later agreed to honor the original terms and eventually changed the company’s name to X as part of a chaotic overhaul.
If the court’s ruling rejects his appeal, it will have a major impact on Musk’s personal fortunes.
If Musk were to lose his $51.1 billion worth of stock options, his net worth would plummet to $154.3 billion.
This decline would make him the third richest person in the world after years of being the richest individual alive. According to the Bloomberg Billionaires Index.
