Tesla (TSLA) CEO Elon Musk recently expressed his intention to move his company’s incorporation from Delaware to Texas, weeks after the Delaware Chancery Court rejected his pay package. Columbia Law Professor John Coffee joins Yahoo Finance Live to discuss the implications.
Coffee urges Tesla shareholders to understand Musk “may have different interests than their own.” He notes some CEOs seek states with “very little judicial oversight”, which can harm shareholders in the long run.
Coffee points to Delaware’s response to Tripadvisor (TRIP) as a possible precedent, allowing its exit to avoid feeling companies are locked in. He expects that Musk aims to move his firms out of Delaware but hopes “the cosmetics look a lot better.”
Editor’s note: This video has been edited to remove a statement representing that a shareholder lawsuit against Tripadvisor had reached the Delaware Supreme Court. The case remains pending in Delaware Chancery Court.
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