Tesla (NASDAQ:TSLA) has submitted a proxy statement requesting a shareholder vote on several proposals, including relocating its state of incorporation from Delaware to Texas.
“Texas Is Tesla’s Home. 2024 is the year that Tesla should move home to Texas,” the automaker said in the statement.
“We are asking for your vote to approve Tesla’s move from Delaware, our current state of incorporation, to a new legal home in Texas. Texas is already our business home, and we are committed to it.”
Furthermore, the electric vehicle (EV) giant also asked shareholders to ratify the company’s CEO Elon Musk’s compensation as outlined in the CEO pay package, which shareholders initially approved during the special meeting in 2018.
Earlier this year, a Delaware Court in Tornetta v. Musk invalidated a CEO pay package approved by Tesla stockholders in 2018, which had received about 73% support from disinterested shareholders. The court ruled that the package was not "entirely fair" to the shareholders who had approved it.
“Because the Delaware Court second-guessed your decision, Elon has not been paid for any of his work for Tesla for the past six years that has helped to generate significant growth and stockholder value,” Tesla told shareholders.
“We do not agree with what the Delaware Court decided, and we do not think that what the Delaware Court said is how corporate law should or does work. So we are coming to you now so you can help fix this issue — which is a matter of fundamental fairness and respect to our CEO,” they added.
TSLA shares rose roughly 1% in premarket trading.
Commenting on the matter, Wedbush analysts said the compensation package has been "an area of contention among some investors" but the investment firm expects that the proposal will be approved "and the Delaware court ruling would be moot in essence as Tesla will now be moving to Texas."
"The proxy and shareholder meeting combined with the current state of affairs at Tesla all sets up for more fireworks over the coming months," analysts added.