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Elon Musk has said Tesla will “immediately” hold an investor vote on whether to move its corporate registration to Texas, after a court judgment in Delaware that voided his $56bn pay package.
The billionaire posted his comments about shifting to the state where Tesla’s physical headquarters are located in the aftermath of the ruling this week by Kathaleen McCormick, a judge in the Delaware Court of Chancery.
“Tesla will move immediately to hold a shareholder vote to transfer state of incorporation to Texas,” Musk wrote on his social media platform X.
He added that an informal poll he had earlier held on such a shift was “unequivocally in favour of Texas”.
In the X poll, 87.1 per cent of 1.1mn voters said the electric-car maker should change its state of incorporation.
Tesla already has strong ties to Texas, having moved its headquarters to Austin from Silicon Valley as Musk railed against California’s lockdowns during the coronavirus pandemic.
In this week’s ruling in Delaware, McCormick said Musk’s record breaking $56bn remuneration package was improperly approved by the company’s board and had short-changed shareholders.
Her decision came in a lawsuit by Tesla shareholders who claimed the award was excessive. It also came despite the company hitting 12 out of 16 ambitious financial targets approved by the carmaker’s board when the package was initially approved in 2018.
Musk has previously canvassed his followers on X for their opinion on significant business decisions. In 2021 he asked whether he should sell more of his Tesla shares, while a year later he sought their views on whether to step down as head of Twitter, now renamed X, following his purchase of the platform.
Hours after the ruling, which Tesla can still appeal, Musk wrote on X: “Never incorporate your company in the state of Delaware.”
The ruling comes at a difficult juncture for Tesla, which last month warned that sales growth would slow as consumers cut back and competition, particularly from China’s BYD, intensifies. Tesla’s share price is down about a quarter this year.
When the targets for Musk’s compensation were initially set, they were judged to be extremely exacting as Tesla struggled to increase production.
The plan was intended to lock him into the business at a time when the board was concerned that he might leave to focus on other interests.