Texas-Sized Pay: Musk's $1 Trillion Package Faces New Legal Landscape

Elon Musk's staggering $1 trillion compensation package from Tesla highlights the dramatic benefits of Texas's management-friendly corporate laws. By relocating its incorporation from Delaware to the Lone Star State, Tesla capitalizes on a legal framework that better supports such massive executive remunerations.

Musk's voting influence on his package, significantly stronger under Texas law, almost guarantees its approval, even as Delaware's past judgments hang in legal limbo. His power to vote with 411 million shares dwarfs opposition, essentially nullifying the shareholder challenges seen under Delaware's jurisdiction.

Additionally, Texas's recent bylaw requiring shareholders to own at least 3% of a stock before filing lawsuits further protects corporate decisions. While large investors like Vanguard and BlackRock meet the bar, smaller stakeholders face limited litigation routes, marking a marked contrast to Delaware's open-door lawsuit policy.