Elon Musk announces a prompt shareholder vote on Tesla’s relocation from Delaware to Texas.

Following a recent Delaware court decision that invalidated Elon Musk’s unprecedented Tesla pay package, the entrepreneur is now pursuing shareholder approval for relocating the company’s incorporation to Texas. In response to the court ruling on his 2018 salary package, valued at approximately $51 billion based on current stock prices, Musk initiated a poll on X, asking whether Tesla (TSLA) should shift its registration from Delaware to Texas, where the company is already headquartered.

Shortly after the poll’s launch, Musk announced that the “public vote is unequivocally in favor of Texas,” with over 87% of approximately 1.1 million votes supporting the move. Consequently, Musk revealed his intention to promptly seek shareholder approval to incorporate the electric car manufacturer in Texas.

Delaware is renowned for being a highly favorable jurisdiction for companies of various sizes due to its accommodating legal and tax environment. Nearly 70% of Fortune 500 companies choose Delaware for incorporation, attracted by its appeal for gaining approval for mergers, settling disputes, and its lack of sales tax or tax on intellectual property profits.

While Musk refrained from directly addressing the court’s judgment on his pay package, he advised against incorporating companies in Delaware in a tweet on Tuesday, suggesting Nevada or Texas as preferable alternatives for shareholder decision-making.

The legal dispute arose when Tesla shareholders contested the excessive nature of Musk’s stock options package, asserting that the company’s directors were too closely aligned with Musk to safeguard shareholder interests. The 303 million split-adjusted stock options, part of Musk’s contested package, are currently valued at $51 billion, considering Tuesday’s closing price, and the modest exercise price of $23.34 per share.

Delaware Chancery Court Chancellor Kathaleen McCormick, presiding over the November 2022 bench trial, declared on Tuesday that Musk and the Tesla board failed to prove the fairness of the compensation plan, stating that they “bore the burden of proving that the compensation plan was fair, and they failed to meet their burden.”