Tesla May Move to Texas to Pay Elon Musk $56 Billion
Will Delaware have to say good bye to Tesla? It looks like it if the Tesla board of directors approves a vote to move to Texas.
Back in 2018, Elon Musk promised his company Tesla that he would guide them to earn a valuation of at least $100 billion or he would not get paid.
Musk managed to raise Tesla’s profits so much that they were valued at over $1 trillion, and Musk was supposed to receive a $56 billion payout as a result. That money was to be paid to him in stock options, which grew in value as the company grew.
The state of Delaware has contested the payout, though. A Delaware judge ruled in February of this year that the stock options Musk was paid should be voided. If the stock options were allowed, then they would have increased Musk’s ownership of the company by 7%, up to 20%.
Musk has promised to leave Delaware and move the company to Texas, relocating Tesla there and establishing Texas as the state of incorporation for the electric car manufacturer.
Tesla’s board of directors would still have to vote on the decision, which would require a majority. The decision to make the move to Texas and give Musk his stock options is being championed by Tesla’s chairwoman Robyn Denholm. She says that it is in the best interests of Tesla to pay Musk the shares, because he has helped the company so much and would need a major payout to stay motivated to stick with the company and move it forward. There are concerns that if Musk does not get his way with the shares and the Texas relocation, he might leave Tesla.
How Is Tesla’s Stock Performing?
Tesla shares climbed 1.81% on Friday, and the stock has remained high since late last month when it jumped 34%. The company has had to fire a number of employees recently to help with cutting costs, and their sales outlook for 2024 is not overly optimistic.
Still, there is a lot of faith in the company and what they can do. Musk has committed to doubling down on artificial intelligence investments to help move the company forward, and his charismatic presence and unconventional ideas have kept the company in the public consciousness despite flagging sales.
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