Elon Musk announced on X, the platform he acquired in October 2022, that he will enable Tesla Inc. shareholders to vote on whether the electric vehicle company should relocate its incorporation to Texas from Delaware. This decision comes after a judge in Delaware nullified Musk's $56 billion pay package in a ruling earlier this week.
In response to the ruling, Musk had already initiated a poll regarding the possibility of reincorporating in either Nevada or Texas, where the company is currently headquartered. The Delaware Chancery Court Chancellor, Kathaleen McCormick, invalidated Musk's pay package, which was the largest ever awarded to a U.S. executive. The ruling favored a shareholder plaintiff and criticized the flawed process that led to such an exorbitant compensation.
In her 200-page ruling, McCormick highlighted Musk's close connections with the individuals responsible for negotiating on Tesla's behalf. She also pointed out that the working group involved in creating the pay package was influenced by Musk. Additionally, she described the package, which was granted approximately five years ago and was contingent on Tesla achieving specific milestones, as historically unprecedented.
Consequently, Tesla will need to develop a new compensation package for Musk following the voiding of his previous arrangement. Despite not receiving an official comment from Tesla, as the company disbanded its media relations team in 2020, Musk shared his thoughts on X.
Tesla's stock exhibited premarket growth of 1.3% and has seen a 3% increase over the past 12 months, while the S&P 500 has gained 17.6%.
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