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Following a setback in a Delaware court regarding his nearly $55 billion compensation package, Elon Musk issued a warning to entrepreneurs on Wednesday, advising them to “never incorporate your company in the state of Delaware.” In his unique style of decision making, Musk launched a survey on X considering whether to consider changing Tesla’s state of incorporation to Texas, where its physical headquarters is located.
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Delaware Judge Chancellor Kathleen St. Jude McCormick’s decision Tuesday denies Elon Musk the right to a significant compensation package awarded by Tesla’s board of directors, more than five years after a shareholder lawsuit targeting Musk and company directors. This decision came to light after making it. The lawsuit accused the electric vehicle and solar panel maker of breach of duty, including claims of misappropriation of corporate assets and unjust enrichment for Musk.
The plaintiffs’ legal team argued to invalidate the compensation package, arguing that Musk directed it and that it was the result of sham negotiations with non-independent directors. They also claimed that shareholders had approved it based on misleading and incomplete disclosures in the proxy statement.
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In response, defense attorneys said the pay plan was negotiated fairly by an independent compensation committee, included high performance milestones, and received shareholder approval, even though under Delaware law its There was no need. He also emphasized that Musk, who owned less than a third of the company at the time, was not a controlling shareholder.
Following the decision, the Tesla chief went to Ax to show his disapproval. “If you prefer shareholders to decide on matters I recommend incorporating in Nevada or Texas.” he wrote on his social media platform.
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In a later post, Musk launched a poll on X, asking whether Tesla should change its state of incorporation to Texas, where its physical headquarters is located. The survey received more than 3.5 lakh votes, of which 90 percent expressed support for the proposal.
Notably, in 2022, the same judge presided over the case where Twitter ultimately forced Musk to move forward with the acquisition of the company.
(input from wires)
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