Elon's exodus: Tracking Musk's business incorporation state changes

Billionaire Elon Musk is urging businesses around the country to change their state of incorporation from Delaware to other states, like he is doing with his companies in response to a Delaware court voiding his Tesla compensation package.

The $56 billion Tesla compensation plan – the largest awarded to an executive at a publicly traded company – was voided last month after a Delaware judge ruled in favor of a shareholder’s lawsuit. The judge held that Tesla’s shareholders were not adequately informed of Musk’s close ties to the directors who approved the comp plan or that he was already on pace to achieve many of the performance-based targets. 

In response to the Delaware judge’s ruling, Musk vowed to convert the incorporation state for his businesses – writing in a post on X after the ruling that entrepreneurs and founders should "never incorporate your company in the state of Delaware." In announcing SpaceX’s switch to Texas on Wednesday in a post on X, he wrote "If your company is still incorporated in Delaware, I recommend moving to another state as soon as possible."

Beyond moving his own companies’ registrations out of Delaware and encouraging other corporate leaders to follow suit, Musk wrote on X Wednesday night that, "None of my companies will consider acquiring a company incorporated in Delaware, as it is a guarantee of spurious litigation."

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Musk’s corporate exodus from Delaware pre-dated the invalidation of his Tesla compensation package, although it has dramatically accelerated in the weeks since the ruling. Here is a look at where his major corporate entities are registered.

The Space Exploration Technologies Corporation, more commonly known as SpaceX, changed its business registration state from Delaware to Texas on Wed. Feb. 14, with Musk announcing in a post on X, "SpaceX has moved its state of incorporation from Delaware to Texas!"

SpaceX’s status as a privately held company allowed Musk to easily change its incorporation state without the scrutiny that would come with such a move as a publicly traded company.

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Electric vehicle giant Tesla has been incorporated in Delaware since its formation in 2003, and its status as a publicly traded company makes it the most challenging of Musk’s firms to change the registration state given the potential for investor lawsuits. 

In the wake of the Delaware ruling invalidating his compensation package at the company he founded, Musk polled users on X about whether he should move the company to Texas – a proposition that respondents were overwhelmingly in favor of. 

"The public vote is unequivocally in favor of Texas!" Musk declared after the vote closed. "Tesla will move immediately to hold a shareholder vote to transfer state of incorporation to Texas."

Neither Musk nor Tesla have indicated when a shareholder vote on changing the company’s state of registration may occur. Tesla did not immediately respond to an inquiry on the subject.

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After a group of investors led by Musk acquired Twitter for $44 billion in October 2022 and took the company private, Musk reincorporated the company in Nevada in April 2023 at the same time he rebranded the social media platform as X.

Musk initially founded The Boring Company (TBC) as a subsidiary of Tesla in 2017 before it was spun off as a standalone venture the following year. TBC provides tunnel construction and equipment services for projects like the Las Vegas Convention Center Loop – an underground tunnel network that serves as a dedicated taxi route to bypass congested surface roads.

When it was spun off, TBC was initially registered in Delaware, but it was changed to Nevada in March 2023.

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Neuralink, a privately-held company founded by Musk in 2016, announced that it changed its incorporation from Delaware to Nevada last week.

The neurotechnology company announced it successfully implanted its first brain chip into a human patient in late January. Musk said in a post on X that the wireless brain-computer interface implantation was successful with the patient recovering well and added, "Initial results show promising neuron spike detection."

MUSK SWITCHES NEURALINK LOCATION OF INCORPORATION TO NEVADA

Musk’s artificial intelligence (AI) company xAI was founded in March 2023 and incorporated in Nevada at its inception. The company publicly launched in July 2023 and announced at the time, "The goal of xAI is to understand the true nature of the universe."

Musk had previously served on the board of directors of non-profit research company OpenAI, which has since risen to prominence amid the AI boom and has a partnership with Microsoft, though he left the role in 2018 due to a disagreement over AI safety.

Musk founded the Musk Foundation in 2002 to award grants in support of renewable energy research and advocacy, human space exploration research and advocacy, pediatric research, science and engineering education, plus the development of safe AI to benefit humanity.

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The Musk Foundation is registered in Austin, Texas – though it is unclear whether that was the original registration location of the 501(c)(3) tax-exempt private foundation.