STORY: A day after a Delaware judge invalidated Elon Musk’s $56 billion pay package from Tesla, the CEO of the electric vehicle maker said he’ll hold a shareholder vote to move its state of incorporation from Delaware to Texas.

In her ruling, Delaware judge Kathaleen McCormick called Musk’s compensation deal, which is the largest in corporate America, “an unfathomable sum” that was unfair to shareholders. She described his share-based pay package – which dates back to 2018 – as being negotiated by directors who appeared beholden to Musk.

After the ruling, Musk posted on his social media site X: “Never incorporate your company in the state of Delaware.”

Musk’s idea to try to incorporate Tesla in Texas – should he actually go through with the vote – is not without risk. Legal experts said Musk would almost certainly be sued by investors, particularly if the move was seen as a way to secure his pay package rather than obtain some benefit for the company.

Getting shareholders on board could be another hurdle for Musk, with one business advisor telling Reuters it could affect their rights and the company’s governance.

The ruling is not the first time that Musk has suffered a setback in Delaware.

McCormick was the same judge who oversaw Twitter’s July 2022 lawsuit against Musk after he tried to back out of his contract to buy the social media platform for $44 billion. The judge rejected his delay tactics and Musk finally went through with purchasing Twitter, which he renamed X.