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TESLA: Elon Musk transfers Tesla's legal home to Texas

Elon Musk has said that Tesla would quickly commence a shareholder vote to transfer the company's legal headquarters from Delaware to Texas.

After the court in Delaware nullified Mr. Musk's $55.8 billion (£44 billion) compensation arrangement with Tesla, this event took place.

After the court's ruling, he said on social media: "It is advisable to refrain from incorporating your company in the jurisdiction of Delaware."

 

Many well-known companies, like Amazon, are registered in Delaware, famous for its advantageous tax system.

In her recent verdict, Judge Kathleen McCormick concluded that the Tesla directors who negotiated the 2018 remuneration package may have needed to be more enthusiastic and sufficiently notify shareholders, maybe due to Mr. Musk's charismatic and persuasive image.

She saw the agreement as "beyond understanding" and decreed that it should be ended.

Mr. Musk's pay arrangement set a new record as the richest in the history of American firms, ultimately making him the wealthiest person in the world.

According to estimates by Bloomberg and Forbes in November 2023, his net worth was expected to be between $198 billion and $220 billion.

Tesla's compensation framework for Mr. Musk depends on achieving specific performance benchmarks, such as the company's stock price and profitability, and does not include a fixed salary.

Stockholder Richard Tornetta filed a complaint, arguing that the amount of money earned was disproportionate.

Mr. Tornetta, who has only nine Tesla shares, commenced a legal action to annul the award.

Following the court ruling, Mr. Musk conducted a poll on his social media platform X, formerly referred to as Twitter, to determine if Tesla should change its legal status by incorporating in Texas.

The survey garnered more than 1.1 million votes, with an overwhelming majority of over 87% voting in favour of the proposed change.

"The public vote strongly favours Texas!" Mr. Musk said on X.

The electric car company moved its primary headquarters from Palo Alto, California, to Austin, Texas, in 2021.

It came after Mr. Musk expressed his displeasure with California's tax policies and regulations.

Furthermore, he had disputes with authorities when he recommenced operations at a factory in Fremont throughout the Covid-19 epidemic.

Tesla operates an electric car, "gigafactory," in Texas and plans to expand its size and capability.

Mr. Musk has encountered similar obstacles in Delaware, and the current payment directive issued by Judge McCormick adds to that roster.

The judge indicated earlier that he oversaw the legal proceedings of Twitter's lawsuit in July 2022 after his endeavour to withdraw from an agreement to purchase the company for $44 billion.

She countered his arguments, and Mr. Musk proceeded with the purchase of Twitter, eventually rebranded as X.