Elon Musk speaks at a political convention on Dec. 15, 2023, in Rome, Italy. Photo: Antonio Masiello/Getty Images
Elon Musk asked his nearly 171 million X followers in a poll whether Tesla should reincorporate in Texas after a Delaware judge invalidated his $56 billion compensation package on Tuesday.
Why it matters:Musk's eye on reincorporating the automotive company comes as the Lone Star State works on setting up its own business court network — which could challenge Delaware's preeminence, writes Axios' Shauneen Miranda.
Catch up quick: A Delaware Chancery Court judge on Tuesday voided Musk's multibillion-dollar pay deal, ruling that the world's richest man "failed" to prove the compensation package was fair.
Texas Gov. Greg Abbott chimed in on Musk's poll, saying: "Elon, it's over. The election desk is declaring a landslide victory for Texas."
Zoom in: The Delaware Chancery Court is the country's preeminent business court, which pushed a large majority of companies to incorporate in Delaware, along with the state's extremely business-friendly tax and privacy laws.
Yes, but: Tesla's potential reincorporation in Texas could set the stage for "a bit of legal competition" between Delaware and the Lone Star State, according to Garland Kelley, a Texas-based partner at Looper Goodwine PC.
A new Texas law, signed by Abbott in June 2023, establishes business courts in the state that will deal with complex commercial disputes.
However, it could be years before these Texas cases play out in the new courts, according to JD Reed, partner at Texas-based Holmes Firm PC.
"We're a long way out from being able to determine whether the business courts have real legitimacy in comparison to Delaware courts," Reed said.
