Elon Musk shifts SpaceX's state of incorporation from Delaware to Texas following legal...

midian182

midian182

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What just happened? SpaceX CEO Elon Musk says that the company has now changed its state of incorporation from Delaware to Texas. The move comes soon after a judge in Delaware voided Musk's $56 billion Tesla compensation package, leading to his X/Twitter post advising people never to incorporate companies in the state.

Musk's reputation for holding a grudge was evident after Delaware Judge Kathaleen St. J. McCormick in January agreed with Tesla shareholder Richard Tornetta's lawsuit that claimed Tesla breached its fiduciary duty by unjustly enriching its CEO to the tune of $56 billion. Musk is expected to file an appeal to the Delaware State Supreme Court.

Musk's first response to the ruling was an X post suggesting founders never incorporate companies in Delaware, opting for Nevada or Texas if "you prefer shareholders to decide matters."

The billionaire followed up with a poll asking if he should change Tesla's state of incorporation to Texas, home of the company's physical headquarters. After 1.1 million people participated, the final outcome was 87.1% in favor of the move. Musk later confirmed that Tesla would be immediately moving to hold a shareholder vote to transfer its state of incorporation to Texas.

Musk began the process of switching the incorporation of his brain-chip implant firm Neuralink from Delaware to Nevada last week. Now, SpaceX, which has its headquarters in Southern California, is joining the exodus from Delaware, which has long been a favored state of incorporation for many companies.

"SpaceX has moved its state of incorporation from Delaware to Texas!" Musk wrote in a post on X on Wednesday. "If your company is still incorporated in Delaware, I recommend moving to another state as soon as possible."

Musk was moving companies out of Delaware even before the Tesla pay-package ruling. After he succeeded in his protracted battle to acquire Twitter in 2022, he moved its state of incorporation to Nevada. His recently revealed artificial intelligence company, xAI, was also incorporated in Nevada back in March last year.

Musk was recently voted the most-overrated CEO in a Fortune survey in which hundreds of CEOs were asked to rank their peers in terms of who is most overrated and who doesn't get enough credit. Musk took the unwanted title for the second year in a row, while Microsoft boss Satya Nadella was voted most underrated for the eighth year running.

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https://www.techspot.com/news/101893-elon-musk-shifts-spacex-state-incorporation-delaware-texas.html

 
If you take your company public you do, in fact, have to listen to shareholders.


From investopedia:
"The board of all publicly-traded companies in the United States must be comprised of both inside and outside representatives who are objective and proactive.

Directors must advocate for shareholders and monitor corporate management to ensure that the team promotes and maximizes shareholders' interests and value. A board made up entirely or primarily of management would clearly be hampered by conflicts of interest, and the preservation of shareholder value might not be a priority."

The conflict of interest is why the shareholder won the lawsuit, and it is why Elon is moving the company to Texas, however, the law should be just as valid in Texas as it is in Delaware. If he's purposefully moving the company to ensure the board of directors will give him that massive bonus the people on the board should be removed by resolution.
 
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People criticize Musk, but the board members agreed to the bonus if he made certain improvements to the company and he exceeded all of those targets. I guess they thought those targets were unobtainable when making the agreement? And if he did meet those unobtainable targets then I'd be mad, too.

I also don't know what the shareholders are so mad about, he would have been paid in stock options that Tesla would have provide through a buy back program. The buy back program would increase the share price because *surprise* someone is buying up 55 billion in Tesla stock.
 
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yRaz said:
People criticize Musk, but the board members agreed to the bonus if he made certain improvements to the company and he exceeded all of those targets.
Click to expand...

The board shouldn't be offering more money than they've ever grossed to the CEO. Whatever agreement was made doesn't matter; they shouldn't be making agreements that significantly reduces the money shareholders make. The board of directors have a duty to look after the profits of the shareholders, which is exactly what the lawsuit was about. It's like you don't understand the term "fiduciary".
 
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"After he succeeded in his protracted battle to acquire Twitter in 2022, he moved its state of incorporation to Nevada." That's some word smithing you did there to make Elon look better than he is.

Elon was forced to complete the acquisition. He came to Twitter with a price above their stock value and with due diligence waved to make the deal look too good to resist. Then Elon tried to get out of the deal he proposed. Then he badmouthed Twitter on Twitter causing a significant drop in their stock prices. He didn't succeed in doing something he was trying to do, he was forced to pay an outrageous amount of money, that he proposed, after he realize it was a bad idea, but only after the offer was signed by both parties and after giving up due diligence...on purpose. I'm sure he's made some great deals before, but buying Twitter just so he could run it how he wanted to, at a massive loss was not one of them.

I wonder if Twitter employees wake up every day wondering if this is the day they all get laid off.
 
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Bobbydpue said:
The board shouldn't be offering more money than they've ever grossed to the CEO. Whatever agreement was made doesn't matter; they shouldn't be making agreements that significantly reduces the money shareholders make. The board of directors have a duty to look after the profits of the shareholders, which is exactly what the lawsuit was about. It's like you don't understand the term "fiduciary".
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The shareholders make more money by the increase in stock price that a $55 billion buy back creates. It's not like Tesla stock pays dividends so taking money out of company coffers would impact their payout. Wait until they buy back all 55 billion in stock, sell. Short sell it after all the purchasing is done and buy more on the way back down. It's very rare that you know the price action months or years in advanced. This is a stupid lawsuit and I'm going to lose a lot of money because if this.

I see tons of people complaining about Musk but I doubt any of them are actual share holders or trade on any regular basis. I don't care why a company is doing a buy back, I'm pissed that I'm missing out on an opportunity because you know essentially when the high and the low is so you make money in both directions. Although, considering how many people on techspot call crypto a ponzi or pyramid scheme I don't think their audience is very well educated in finance.
 
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Bobbydpue said:
"After he succeeded in his protracted battle to acquire Twitter in 2022, he moved its state of incorporation to Nevada." That's some word smithing you did there to make Elon look better than he is.

Elon was forced to complete the acquisition. He came to Twitter with a price above their stock value and with due diligence waved to make the deal look too good to resist. Then Elon tried to get out of the deal he proposed. Then he badmouthed Twitter on Twitter causing a significant drop in their stock prices. He didn't succeed in doing something he was trying to do, he was forced to pay an outrageous amount of money, that he proposed, after he realize it was a bad idea, but only after the offer was signed by both parties and after giving up due diligence...on purpose. I'm sure he's made some great deals before, but buying Twitter just so he could run it how he wanted to, at a massive loss was not one of them.

I wonder if Twitter employees wake up every day wondering if this is the day they all get laid off.
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Twitter was using a strategy where they label debts as assets. When the numbers became scrutinized this was discovered and Elon backed out of the deal because Twitter was essentially lying about their finances but it's a trick that people use to defer taxes. This is why Twitter had to sue Elon and why their stock price dropped. Twitter manipulated the lawsuit and had it put in front of a judge that usually favors the company.
 
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yRaz said:
Twitter was using a strategy where they label debts as assets. When the numbers became scrutinized this was discovered and Elon backed out of the deal because Twitter was essentially lying about their finances but it's a trick that people use to defer taxes. This is why Twitter had to sue Elon and why their stock price dropped. Twitter manipulated the lawsuit and had it put in front of a judge that usually favors the company.
Click to expand...

That was entirely his fault though as Musk negotiated and signed the Twitter deal without carrying out enough financial due diligence. Caveat Emptor

This is no different to you buying a car just based on photo and complaining about a problem with the engine
 
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SoftFox said:
Musk negotiated and signed the Twitter deal without carrying out enough financial due diligence.
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A due diligence waiver doesn't cover financial fraud, nor intentionally false statements by management.

And those criticizing Musk for losing money in Twitter forget that from the start Musk stated his purchase of Twitter wasn't a financial investment, but rather about the importance of an open public forum. Since Bezos bought WaPo, he's proportionally lost more of his investment than Musk did on Twitter, yet you don't see the Leftist bobbleheads jeering him in public forums. Why not? Because the media hasn't yet told them what opinion they're supposed to have.
 
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Microsoft creates nothing new, just keeps pumping cash from their robber baron (Bill) obtained land holdings (similar to Comcast, etc.). Musk makes a difference, adds real value, improves the world even when he overpays or is overpaid ;-).
 
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SoftFox said:
That was entirely his fault though as Musk negotiated and signed the Twitter deal without carrying out enough financial due diligence. Caveat Emptor

This is no different to you buying a car just based on photo and complaining about a problem with the engine
Click to expand...
He backed out after their financial games were found out. His "criticism" on Twitter was about said lies of their financial situation and backed out because of it. So the lawsuit was originally in Delaware(for the Twitter lawsuit) but Twitter had the suit moved to a judge in California and cited "using the platform to spread hate speech" as a reason that Elon had to buy the platform. the California judge sided with Twitter and ordered Musk to buy it.

So now Twitter is sueing the state of California for the hate speech verdict. But do you know what the hate speech verdict is based on? California is basing the hate speech verdict on a post Musk made of him posting a picture of the Bat Signal.

That is 100% not a lie or an exaggeration. Twitter knew they were losing the lawsuit so the moved it to California. After moving it to California, CA sided with Twitter, declared the Bat symbol as hate speech and made Musk buy Twitter for $44billion.
 
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