Elon Musk’s Neuralink moves legal home to Nevada after Delaware judge invalidates his Tesla pay deal
Elon Musk’s brain implant company Neuralink has moved its legal business home from Delaware to Nevada after a Delaware judge struck down Musk’s $55.8 billion pay package as Tesla CEO.
Neuralink, which has its physical headquarters in Fremont, California, became a Nevada company on Thursday, according to state records. Delaware filings also list the company’s legal home as Nevada.
The move comes after Musk wrote on X, formerly Twitter, that shareholders of Austin-based Tesla would be asked to consider moving the company’s corporate registration to Texas.
“Never incorporate your business in the state of Delaware,” he wrote in a post after the court ruling. He later added: “I recommend incorporating in Nevada or Texas if you prefer shareholders to decide things.”
Legal experts say most companies set up legal shop in Delaware because the laws there favor companies. “Delaware has built its preferred company by being friendly to company management, not shareholders,” said Erik Gordon, a professor of business and law at the University of Michigan.
On Jan. 30, Delaware Chancellor Kathaleen St. Jude McCormick voided the pay package Tesla set up for Musk in 2018, ruling that the process was “flawed” and the price “unfair.” In her statement, she called the package “the largest potential offset opportunity ever observed in the public markets, by several orders of magnitude.”
McCormick’s statement caused Musk to drop from the top spot on Forbes’ list of richest people.
Musk, co-founder of privately held Neuralink, is listed in Nevada filings as company president. Messages were left Saturday seeking comment from Neuralink and Tesla.
McCormick determined that Tesla’s board was not independent of Musk. His lawyers said the package had to be rich to give Musk an incentive not to leave – an argument the judge rejected.
“Excited by the ‘all positive’ rhetoric, or perhaps blinkered by Musk’s superstar appeal, the board never asked the $55.8 billion question: ‘Was the plan even necessary for Tesla to keep Musk and achieve its goals?’” McCormick wrote. .
Musk’s fans argue that he should not be paid like other CEOs because he is not like other CEOs. He and Tesla are virtually inseparable, so keeping him as CEO is key to the company’s growth. He built the company from an idea into the world’s most valuable automaker, selling more electric vehicles than any other company last year. Its star power gets free publicity, so the company spends little on advertising. And he has forced the rest of the auto industry to accelerate plans for electric vehicles to counter Tesla’s phenomenal growth.
McCormick’s ruling came five years after shareholders filed a lawsuit accusing Musk and Tesla directors of breaching their duties and arguing that the pay package was a product of sham negotiations with directors who were not independent of him.
The defense countered that the pay plan was fairly negotiated by a compensation committee whose members were independent and had lofty performance milestones.
Musk wrote on X last month that the first human received a Neuralink implant. The billionaire provided no additional details about the patient.