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SpaceX’s Legal Home Moved from Delaware to Texas – Elon Musk

By Oluchukwu Ikemefuna

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In 2018, Tesla decided to award Elon Musk a mind-blowing $56 billion pay package. That huge sum of money catapulted him to the top of the world’s richest lists. However, things took a turn recently when a judge named Kathaleen McCormick in Delaware declared the deal between Tesla and Elon Musk to be invalid. The judge called the compensation an “unfathomable sum” that’s unfair to the shareholders. This sure is going to affect SpaceX and his other businesses.

SpaceX

The judge found that the board of the electric-vehicle maker had inappropriately set Musk’s compensation and struck down the whole package. This decision came after a lawsuit filed by a Tesla shareholder named Richard Tornetta, who had accused Musk of improperly influencing the negotiations around the compensation package. Tornetta also claimed that the board had acted without independence. 

The Effect of The Ruling On SpaceX 

The ruling has caused quite a stir, not just for Tesla, but also for SpaceX, which is closely connected to Elon Musk. The plaintiff who brought the case argued that the massive pay package was unjust to the shareholders and that the company’s board failed in their fiduciary duty by approving it. Tesla is expected to file an appeal against the ruling. Interestingly, Elon Musk responded by saying that he would never incorporate any company in Delaware. 

Elon Musk Plans to Move SpaceX

Tesla’s agreement with Musk for this compensation package is actually the largest ever for an executive. It’s a massive deal and plays a significant role in Musk’s overall fortune, which is already one of the largest in the world. During the compensation trial in November 2022, Musk even testified that the money would be used to finance interplanetary travel. 

But after the judge invalidated that deal, Elon Musk made a big move. He announced on X that his aerospace company, SpaceX, has officially shifted its corporate home from Delaware to Texas. Elon even shared a copy of the certificate of conversion they received from the Texas Secretary of State. 

He went even further and suggested that companies currently incorporated in Delaware should seriously think about moving to another state. Elon seems to be advocating for a big change in the corporate landscape. It’ll be interesting to see if his suggestion has any impact on the decisions of companies in Delaware. 

Also, a few weeks ago, Elon Musk made an announcement that the shareholders of Tesla, the electric carmaker, will have the opportunity to vote on making a similar move to Texas. Elon is really shaking up the corporate world.

Effect of The Ruling On Elon Musk Net Worth

His brain-chip implant company, Neuralink, has also recently relocated its legal home to Nevada. It’s amazing to see how Elon is making moves across different ventures and industries. The recent ruling means that Tesla’s board will need to come up with a new compensation plan for Elon Musk, unless they decide to appeal the decision. It’s quite a significant development for both Tesla and Elon Musk. Speaking of Elon’s wealth, Forbes states that his net worth is estimated to be around $182.6 billion, which makes him the second richest person in the world on the Forbes Real Time Billionaires list. 

After the ruling in Delaware, Elon ceded the title of the world’s richest person to LVMH CEO Bernard Arnault. It’s incredible to see how fortunes can shift in the business world. By the way, Delaware is a popular choice for incorporating companies due to its tax benefits and corporate-friendly laws. 

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Abdullahi Kafayat
Abdullahi Kafayat

Abdullahi Kafayat is an enthusiastic writer interested in the tech world. She's a graduate of Obafemi Awolowo University and has a BSc in Chemistry. You can reach her at Kafayatabdullahi17@gmail.com.

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