SpaceX Moves Incorporation State from Delaware to Texas, Challenges Father Company’s Compensation Package Ruling
SpaceX CEO Elon Musk has announced the relocation of the company’s registration state from Delaware to Texas after a court in Delaware struck down Musk’s massive compensation package at Tesla, another venture led by the billionaire.
SpaceX, Twitter and electric car maker Tesla CEO Elon Musk attends an event during the Vivatech technology startups and innovation fair at the Porte de Versailles exhibition centre in Paris, on June 16, 2023. (Photo by JOEL SAGET/AFP via Getty Images / Getty Images)
Expanding Influence Challenges
SpaceX’s decision to change its state of incorporation follows the recent ruling by a Delaware judge that invalidated Musk’s $56 billion compensation package at Tesla, where Musk holds the position of CEO. The compensation package received widespread attention for being the largest ever provided to an executive and significantly contributed to Musk becoming one of the world’s wealthiest individuals.
SpaceX founder Elon Musk has looked to move his businesses out of Delaware following the court’s ruling that voided his Tesla pay package. (Photo by Michael Gonzalez/Getty Images / Getty Images)
Compensation Package Legal Battle
This move by Musk is a direct response to the judge’s decision, which arose from a lawsuit filed by a shareholder. The lawsuit argued that Musk’s close connections with directors who negotiated the substantial compensation package were not properly disclosed before a stockholder vote to approve the deal. Furthermore, the judge determined that the projected performance targets in the package were easier to achieve than the company indicated and internal projections demonstrated that Musk was already on track to qualify for a significant portion of the package.
Relocation and Immediate Plans
Musk expressed his dissatisfaction with the ruling by strongly advising entrepreneurs and founders to avoid incorporating their companies in the state of Delaware. In light of these events, Musk conducted a popular poll on X, the social media platform formerly known as Twitter, asking users whether Tesla should relocate to Texas. The resounding response from the poll prompted Musk’s declaration that the public vote overwhelmingly favored Texas, thereby leading Tesla to promptly schedule a shareholder vote to transfer the state of incorporation.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| TSLA | TESLA INC. | 188.71 | +4.69 | +2.55% |
“The public vote is unequivocally in favor of Texas!” Musk proclaimed excitement once the poll closed. “Tesla will move immediately to hold a shareholder vote to transfer the state of incorporation to Texas.”
Seizing the Opportunity
SpaceX, being a privately-held company, allowed Musk and the company’s leadership to expedite the process of changing its state of incorporation. Musk celebrated this landmark by showcasing the SpaceX logo with the illustrious Texas silhouette.
FOX Business’ Chris Pandolfo contributed to this report.
