Tesla is asking its shareholders to reinstate CEO Elon Musk‘s pay package and to move the company’s incorporation from Delaware to Texas, months after a judge rejected the chief executive’s $56 billion compensation.
Tesla shareholders voted to approve Musk’s pay package in 2018, but a Delaware judge voided it in January, siding with investors that sued to challenge the compensation package, which is the largest ever for a U.S. executive.
The compensation includes no salary or cash bonus, but sets rewards based on Tesla’s market value rising to as much as $650 billion over the next 10 years. Tesla is now valued at around $500 billion.
Musk previously vowed that this vote was coming.
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After Delaware Judge Kathaleen McCormick tossed Musk’s share-based pay package, ruling that the “unfathomable sum” was unfair to shareholders and negotiated by directors who appeared beholden to Musk, the Tesla CEO wrote on X, “Never incorporate your company in the state of Delaware.”
In a follow-up post on X, Musk polled the platform’s users, asking, “Should Tesla change its state of incorporation to Texas, home of its physical headquarters?” The results of the poll were 87.1% “Yes” and 12.9% “No” after more than 1.1 million users voted.
“The public vote is unequivocally in favor of Texas!” Musk said. “Tesla will move immediately to hold a shareholder vote to transfer state of incorporation to Texas.”
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In a letter included with the SEC filing posted Wednesday, Tesla Board Chair Robyn Denholm wrote, “We do not agree with what the Delaware Court decided, and we do not think that what the Delaware Court said is how corporate law should or does work.”
Tesla’s headquarters is already in Austin, Texas, after the company made the move from California in late 2021. So, Denholm argued, it makes sense to incorporate in the Lone Star State, too.
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“2024 is the year that Tesla should move home to Texas,” she wrote to shareholders. “We are asking for your vote to approve Tesla’s move from Delaware, our current state of incorporation, to a new legal home in Texas. Texas is already our business home, and we are committed to it.”
FOX Business’ Chris Pandolfo and Reuters contributed to this report.