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Delaware to Texas Incorporation
- Thread starter Buckminster
- Start date
sleepydoc
Well-Known Member
So the manchild is basing business decisions off of a twitter vote? That alone should be enough for a shareholder revolt
No, it will be based on the shareholder vote.
sleepydoc
Well-Known Member
Yes, I know, but even basing the decision to put it to a shareholder vote on a twitter poll is questionable, to put it nicely.
popgodazipa
Member
I think you are taking that tweet too seriously. But hey bashing Elon is in vogue so ....
adiggs
Well-Known Member
I'm curious to know if anybody has any actual knowledge about how being incorporated in Texas is different from Delaware. The sum of what I've read is that Delaware has a business focused court where Texas and most of the rest of the country does not.
sleepydoc
Well-Known Member
Oh, no. It was something he only decided to do after long consideration and introspection in consultation with expert advisors…
sleepydoc
Well-Known Member
Just calling out his behavior. If calling out questionable behavior is in vogue then so be it.
Yes. From what I’ve read the laws in Delaware are more streamlined, allowing for cases to be heard from an administrative law judge and resolved quickly rather than go through a jury trial. It also has more business friendly tax laws.
Exactly - Texas (or any other state) would likely be no better and may well be worse.
Yes, that matches what I’ve read elsewhere as well. Essentially there was enough evidence that the board was not doing its duties and acting in shareholder interest for the judge to rule as she did.
JWLV
Member
Texas governor just created a business court a few months ago (HB19). It won't even be open for a few more months. The court will be presided by 7 justices appointed by the governor. All this would seem to be Tesla friendly for now. Musk is thinking that the new business court will be great for him and Tesla and he's probably right. But really it's probably more about him and less about Tesla. He is mad about his $57 billion compensation package that the Delaware court shot down. Keep in mind that Tesla's 2023 gross revenue was $97 billion, net income was $15 billion. So he wants nearly 4x what the company made in profits in 2023. The board of a corporation's legal duty is to act in the best interest of its shareholders. It was speculated that Musk influenced the board to give him that massive compensation package. After all, paying $57 billion to a single person (CEO or not) when the company profitted $15 billion does not seem to be on the level with acting in the best interest of shareholders. That is why the Delaware judge stuck it down.
If Tesla incorporates in Texas, it also means that anyone who does business with Tesla, whether they are suppliers, services, labor, or anything else will also know what could happen if they conduct business and have a dispute with Tesla in the state of Texas. B2B disputes happen all the time. Some businesses might hesitate if they are dealing with Tesla in Texas. Or they just might increase prices to mitigate the risk of dealing with Tesla in Texas.
Also keep in mind that Texas is one of a handful of states that still keeps minimum wage at the federal level, which is $7.25/hour. You might end up with cars worth $7.25/hour. Just as a comparison, other states minimum wages are: AZ $14.35, CA $16.00, CO $14.42, FL $12.00, MN $10.85, MO $12.30, NM $12.00, SD $11.20, VA $12.00.
The reason why Delaware is the preferred choice for a vast majority of corporations is that Delaware is known to be fair and impartial. It does not and did not matter whether the state is red or blue, the courts are fair. Corporations know that and depend on that fact.
If Tesla incorporates in Texas, it also means that anyone who does business with Tesla, whether they are suppliers, services, labor, or anything else will also know what could happen if they conduct business and have a dispute with Tesla in the state of Texas. B2B disputes happen all the time. Some businesses might hesitate if they are dealing with Tesla in Texas. Or they just might increase prices to mitigate the risk of dealing with Tesla in Texas.
Also keep in mind that Texas is one of a handful of states that still keeps minimum wage at the federal level, which is $7.25/hour. You might end up with cars worth $7.25/hour. Just as a comparison, other states minimum wages are: AZ $14.35, CA $16.00, CO $14.42, FL $12.00, MN $10.85, MO $12.30, NM $12.00, SD $11.20, VA $12.00.
The reason why Delaware is the preferred choice for a vast majority of corporations is that Delaware is known to be fair and impartial. It does not and did not matter whether the state is red or blue, the courts are fair. Corporations know that and depend on that fact.
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JWLV
Member
I find it rather amusing that a single shareholder that owned just 9 shares of TSLA stock brought the case against Musk, which resulted in Musk losing his $57 billion compensation package. No wonder he's pissed. But he can avoid all that by doing what he did with Twitter by buying back all the stocks, take it private, and renaming it to X. To do the same for Tesla, he could name it TX (or is TX already taken by Texas?).
“The public vote…” 
Like walking into a bar and asking everyone to vote “to drink” or “not to drink.” You know what the majority response will be. That’s an extremely biased sample for the vote.
The board is built of devotees who feel they owe Musk something. I can see an investor vote happening. Whether or not the results of the actual vote is in his favor is to be seen.
Part of the reason for dropping the pay package was that Musk and the board were proven to have deceived investors in order to secure their votes. Investors may not appreciate being treated that way and could vote against Musk’s desire to move to Texas.
Like walking into a bar and asking everyone to vote “to drink” or “not to drink.” You know what the majority response will be. That’s an extremely biased sample for the vote.
The board is built of devotees who feel they owe Musk something. I can see an investor vote happening. Whether or not the results of the actual vote is in his favor is to be seen.
Part of the reason for dropping the pay package was that Musk and the board were proven to have deceived investors in order to secure their votes. Investors may not appreciate being treated that way and could vote against Musk’s desire to move to Texas.
Larry Goldberg, a frequent guest of Herbert Ong, and I think Farzad too, said the attorney representing 9-share, could get as much as 5 Billion. That's BILLION with a B.
Also, if you don't think Judge McCormick will lean to the high side of what is legally possible, you're not paying attention.
Also, if you don't think Judge McCormick will lean to the high side of what is legally possible, you're not paying attention.
That is absolutely mental, if something like that is awarded, expect a million attorneys to look at been able to sue Tesla for anything.
I find it astounding that very rarely CEOs who completely mess up companies have to give back lavish compensation packages whilst allegedly because the board didn’t follow the correct procedures EM won’t get his and the attorney could get billions.
Larrys a few beers short of a six pack. He talks nonsense often, he just says things in such a dismissive manner as to discourage others from questioning his supreme knowledge.
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