SpaceX has moved its state of incorporation from Delaware to Texas

States incorporate in Delaware for a reason. Isn’t Elon’s move just because his pay ask was rejected in Delaware? It wasn’t a move based on fundamentals. I don’t see why other companies would do this.

The law in question was one that required unanimous shareholder approval for moves. Now it just requires majority approval.

I can find plenty of articles talking about the repeal of that law in 2022, but I haven't found one that tells me when it was enacted. Does anyone happen to know?

In 1993 Microsoft moved from Delaware to Washington. Microsoft went public in 1986 and so I'm having a hard time imagining that they could have gotten unanimous shareholder approval for anything in 1993 and so infer that the unanimous requirement law came sometime after that.

Companies and investors want stability and consistency. Elon moved SpaceX because he's upset about accountability and governance of corporate structures. It likely won't impact investment from "friends and family" or other individuals who don't mind the volatility for the potential returns and lack of liquidity if private Elon companies stay private to avoid said governance and accountability, but Fidelity might think twice at the next raise.

Matt Levin's take is top notch as always: https://archive.today/XMmoF

> Of course, this is the reason to incorporate in Delaware: Someone is keeping an eye on managers and boards of directors to make sure that they’re running the company in the best interests of all of the shareholders, not just those of the idiosyncratic controlling founders. You can raise capital from investors more easily, because the investors trust that there are rules to protect them, that they are not subject to the whims of self-interested entrepreneurs.

> And yet there is something awkward about a judge second-guessing the CEO compensation decisions of the board of directors of a $600 billion company, even if, yes, it’s the board of Tesla. Musk wanted this pay package, Tesla’s board thought it was a good idea to give it to him, and a majority of Tesla’s shareholders voted to approve it. And then Musk did in fact create a trillion dollars of shareholder value, earning his big pay package and making the shareholders happy. Most of them. But one complained, and that’s enough for a judge to reverse the board’s decision.

> This is not a Delaware thing, really, though it is possible that business courts in Texas or wherever might be more sympathetic to CEOs generally, or to Musk specifically. (Bloomberg reports that “Musk also asked X devotees Tuesday to vote on whether he should shift Tesla’s incorporation papers to Texas,” sure.) It is a public company thing: If you run a public company, not only do you have corporate-law fiduciary duties to your shareholders, but you also have genuinely outside shareholders, index funds and activists and gadflies and anyone else who wants to buy stock. If you run a private company, even one incorporated in Delaware (as, for instance, SpaceX is), you can have a lot of control over who your shareholders are, and you can run the company the way they want, which is usually also the way you want. If you run a public company, you have no control over who gets to be a shareholder, or what they can complain about, or what a court will make of their complaints.

> You know what’s really awkward? A few weeks ago, even as this decision was pending, Musk was out publicly demanding another giant stock grant from Tesla’s board. The threat that was implicit in the 2018 pay deal — if the board didn’t shower Musk with options, he’d take his attention to SpaceX or elsewhere — is explicit today; Musk posted that he’s “uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control,” and that “unless that is the case, I would prefer to build products outside of Tesla.”

It's not about the money. It's about risk vs reward. Musk absolutely killed himself over getting Tesla where it is (it kind of shows in his mental state of late) having that all ripped away because a guy with 9 shares complained about his pay package and won on a minor technicality is vexing to say the least. The pay package required extreme levels of execution, and Tesla achieved extreme levels of execution.

I think you see this with lots of business people, their wealth is the result of their drive. They aren't wealthy because they want to be wealthy they're wealthy as a by-product of the other things they were pursuing. Musk didn't build SpaceX or Tesla to get rich, and what he's demanding isn't really money but control. It doesn't help that it's been about a decade since he heard anyone actually say no to him either until he tried to screw with the Delaware Chancery Court. So now he's tuck tail and running to somewhere he doesn't have to follow the rules.

It's about control of Tesla.

Also Musk's publicly stated goal is to use his fortune to go to Mars.

>more than he can ever spend in ten lifetimes

Twitter has cost a fair chunk. Also a city on Mars could cost.

That said I think much of the annoyance is more about a deal being a deal. The agreed deal was roughly 10x the share price and then you get 10% of the gain, he did it and then some court comes and says ha ha no. Not being able to stick to deals in business makes it hard to do business.

In 2022 their state tax paid was $9M https://edition.cnn.com/2022/02/10/investing/elon-musk-tesla...

Delaware collects ~$6B https://fred.stlouisfed.org/series/QTAXTOTALQTAXCAT3DENO so that's a rounding error of a difference.

Generally speaking, you pay taxes where you do business. If you're doing business in New York state, you'll need pay taxes in NY. If you're doing business in California, you'll need pay taxes in CA. And so on.

Isn't the reason companies incorporate in delaware precisely that they pay hardly any tax at all anyway?

It’s not flat, never has been, and you can measure by how many different legal jurisdictions (which cannot be measured by national borders alone) there are in the world how likely it is it ever will be.

Let me put it this way:

I don’t want Mississippi voters determining the laws of my State and Mississippi doesn’t want California voters determining the laws of Mississippi. When we do need to reach some kind of compromise, that’s what Congress is for, and you can measure what there’s room to compromise on by how much Congress gets done in a given session. That’s why we’re different. That’s sometimes inconvenient, but for most people most of the time those inconveniences never come up for them personally.

Not sure what you mean by "otherwise jurisdictional consistent" but there needs to be some body of law which is used to judge disputes relating to the governance of the corporation. In the US this is the state law of the state in which the corporation was incorporated. I'm not sure why this would ever be a bad thing, could you give an example of the kind of failure you are alluding to?