Tesla Inc TSLA CEO Elon Musk on Tuesday started a poll on X if the company should change its state of incorporation to Texas after a Delaware judge ruled his $56 billion pay package to be “an unfathomable sum.”
What Happened: Tesla is currently incorporated into Delaware but after the judge revoked his pay package, Musk took a U-turn and said, “Never incorporate your company in the state of Delaware.”
Musk added that he recommends incorporating companies into either Nevada or Texas, claiming that it would help shareholders decide the company’s matters. Tesla is headquartered in Texas but Nevada too has a company Gigafactory.
Musk subsequently opened the poll, giving X users time till Wednesday evening to cast their opinions. 425,792 votes have been cast as of the time of publishing with 89.7% leaning towards incorporating the company in Texas.
Delaware court ruling: The Delaware judge on Tuesday ruled in favor of Tesla shareholder Richard J Tornetta who alleged in a lawsuit that the company's directors breached their fiduciary duties by awarding Musk a performance-based equity-compensation plan in 2018.
Under Musk's 2018 compensation plan, Musk was awarded 12 tranches of stock options that vest only if Tesla achieves certain performance targets. Interestingly, the CEO has already qualified for these 12 tranches. The maximum value Musk could realize under the award was pinned at $55.8 billion.
After the ruling on Tuesday, Musk took to X to affirm that his 2018 compensation package was approved by a majority of Tesla shareholders at the time, not including himself and Kimbal Musk. He also added that the ruling is ‘insulting' to shareholders.
The Delaware Judge, however, said, “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?”
The decision, however, can be appealed in the Delaware Supreme Court.
Musk And X Polls: Musk has often held polls and made key business decisions based on them. In 2023, Musk stepped down as Twitter CEO after a majority voted in favor of him stepping down.
He also held polls on whether Twitter should have an edit button, or if former President Donald Trump must be reinstated on X. In 2021, the billionaire held a poll on whether he should sell 10% of his Tesla stock.
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