In the aftermath of a Delaware court ruling that nullified his $55 billion compensation package, Tesla Inc’s CEO, Elon Musk, turned to Twitter to express his dissatisfaction with the corporate framework within the state. His post carried a clear message: “Never incorporate your company in the state of Delaware.”
Musk’s frustrations are understandable given the expensive legal battles he has had in the state, the most recent being the invalidation of his 2018 pay package—described as the largest in U.S corporate history. This ruling came about consequently to a lawsuit filed by a Tesla shareholder who contested that the said remuneration was flawed due to conflict of interest and misleading disclosures by the electric-car company.
This isn’t the first time Musk has publicly broached the subject of relocating Tesla’s operations. He has even polled his vast Twitter following on the possibility of incorporating Tesla in Texas, hinting at the state’s more favorable legal landscape. This move would not be unprecedented; Musk’s SpaceX is already situated in Texas.
Delaware is one of the smallest U.S states but is disproportionately influential in the realm of corporate law. Its business-friendly laws and reputable courts see over a million businesses, including more than half of all publicly-traded U.S corporations and 63% of Fortune 500 companies, incorporate in the state. Clearly, Musk’s outburst may have wider implications for the legal industry and corporations alike.
For full cover of the story, you can read more on Bloomberg Law.