Tesla officially announced Thursday that it will move its incorporation from Delaware to Texas after securing shareholders’ approval during the 2024 Annual Shareholder Meeting.
Tesla receives warm welcome from Texas Governor after winning reincorporation approval
Texas Governor Greg Abbott congratulated Tesla Chief Executive Elon Musk on winning the shareholders’ approval of his controversial $56 billion pay package, marking the highest compensation ever awarded to a company CEO.
The government official also extended his warm welcome to Tesla on its new incorporation in the Lone Star state. CEO Musk appreciated Governor Abbott’s kind words, responding with a simple “Thank you.”
Tesla fans call for a direct sales model
Tesla’s relocation to Texas from Delaware drove several fans, including @HinrichsZane, to call for the Texas government to finally authorize a direct sales model.
“How about removing restrictions on selling Tesla’s directly in Texas. Time to reciprocate.”
Zanegler (@HinrichsZane), Self-proclaimed Tesla Semi Advocate
Zanegler went on to say that he would rather “stick a screwdriver up my nose and out the back of my head than buy a car from a dealership.”
For context, Texas law currently restricts automakers from directly selling to buyers. They need to go through franchised dealerships.
Some Musk followers also expect his social media platform X to also relocate to Texas.
Musk’s companies deserted Delaware since the $56 billion court case
Notably, the Delaware Court of Chancery’s ruling to repeal the already-passed $56 billion pay is the main reason that prompted CEO Elon Musk to give up on Delaware.
Chancellor Kathaleen McCormick ruled to revoke a 2018 compensation package in January 2024, which would have awarded the Tesla boss $56 billion at prior stock prices. The judge defined the amount “unfathomable” for a public company, even saying that Elon Musk had an “undue influence” over the board, which includes his brother, good friends, and close associates.
Since then, CEO Musk has repeatedly stated that the state of Delaware is “unfriendly” to people who manage corporations.
“Never incorporate your company in the state of Delaware.”
Tesla CEO Elon Musk posted on X in late January 2024
True to his words, he moved Neuralink and SpaceX out of Delaware in February. However, it must be noted that the approval of the reincorporation proposal will not ultimately settle the legal disputes. The final ruling on the CEO pay package remains in the hands of the Delaware court.
