Elon Musk announced on Wednesday that he moved the incorporation of his company SpaceX from Delaware to Texas after a blowout with the state’s Court of Chancery.
“Space X has moved its state of incorporation from Delaware to Texas!” Musk said on X. “If your company is still incorporated in Delaware, I recommend moving to another state as soon as possible.”
This follows from a lengthy legal battle with a Delaware judge over Musk’s pay package from Tesla, which the judge eventually blocked on the grounds that the payout was “unfathomable.” Musk now wants to cease all business in the state, having told his 172 million X followers to “never incorporate your company in the state of Delaware” in January. He is now looking to move Tesla’s incorporation from Delaware to Texas as well.
DEVELOPING: Elon Musk announces he has moved SpaceX to Texas following a legal battle with Delaware’s judge Kathaleen McCormick https://t.co/qHGkNMONBJ
— Valuetainment Media (@ValuetainmentTV) February 15, 2024
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The package was set to be the most expensive in American corporate history. In 2018, Musk agreed to become the CEO for one decade, and Tesla struck a deal to pay him 20.3 million stock options estimated to be worth around $55 billion at the time.
The judge argued that the board’s directors were too beholden to Musk to be impartial approvers.
“Swept up by the rhetoric of ‘all upside,’ or perhaps starry eyed by Musk’s superstar appeal, the board never asked the $55.8 billion question: Was the plan even necessary for Tesla to retain Musk and achieve its goals?” wrote Kathaleen McCormick of Delaware’s Court of Chancery.
Then, on Thursday, February 1st, Musk announced he would be holding a shareholder vote on whether Tesla should be moved to Texas since it is a publicly-traded company.
According to legal experts spoken to by Reuters, Tesla’s move to Texas might prove difficult for the serial entrepreneur. “Shareholders need to take a hard look at how transitioning out of Delaware might impact their rights and the company’s governance,” said business adviser Keith Donovan. There may also be several more layers of Tesla administrative approval required for Musk to change incorporation. However, if Musk can come up with a modified charter that does not change anything fundamental, the new incorporation vote could be passed with a simple majority rather than two-thirds.
A shareholder vote can be expected within 40 days if the US Securities and Exchange Commission (SEC) does not decide to intervene and slow the process down.
Shane Devine is a writer covering politics, economics, and culture for Valuetainment. Follow Shane on X (Twitter).
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