How Tesla has prepared to defend Musk's mega pay package from legal challenges

Core Points - Tesla shareholders approved Elon Musk's $1 trillion pay package with a 75% margin, positioning him to potentially become the world's first trillionaire if he meets specific goals [1] - The approval follows the rejection of Musk's previous $56 billion pay package by a Delaware judge, which was influenced by a lawsuit from a small shareholder [2][5] - Tesla has relocated its legal home from Delaware to Texas, where new laws make it more challenging for small shareholders to initiate legal actions against the company [2][3] Legal Changes - Texas passed SB 29 and SB 1057, which impose stricter requirements for shareholders to bring legal challenges, including proving directors acted in bad faith and owning at least 3% of shares to file a lawsuit [3][4] - Tesla incorporated the 3% ownership threshold into its bylaws, significantly limiting the number of shareholders who can challenge board decisions [4][14] - Legal experts indicate that the new Texas laws provide heightened protections for company directors, making it difficult for shareholders to contest Musk's pay package [6][11][12] Implications for Corporate Law - The shift in corporate law is seen as a broader trend where companies are moving to states with more favorable regulations for directors, limiting shareholder rights [15][16] - The changes in Delaware's corporate law also reflect a competitive landscape among states to attract large corporations by offering director-friendly statutes [16][17]