Tesla CEO Elon Musk is still smarting from the legal fallout that overturned his massive 2018 compensation plan, and on Monday, he expressed his frustration by urging companies to relocate out of Delaware.

What Happened: Reacting to CNBC’s interview with former SEC Chair Jay Clayton on the matter, Musk stated, “Move your company out of Delaware before they lock the doors, as they just did with Tripadvisor.”

Clayton mentioned that Tesla’s board is likely to appeal the decision of the Delaware Chancery Court. When asked if the ruling might prompt other companies to leave the state, Clayton pondered whether a flawed process could nullify a sound substance, assuming the original substance of the decision was sound. “If the Supreme Court of Delaware confirms the substance was sound and the process flawed, then that’s acceptable,” he remarked.

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The Delaware court ruled in favor of the minority shareholders, asserting that excluding the votes of Greg Maffei, the company’s chairman, resulted in only 5.4% support for reincorporation. Maffei, holding 56% of the vote at Tripadvisor, primarily through supervoting shares, wielded significant influence.

Unlike Delaware, known for imposing stricter standards on companies pursuing transactions favoring a controlling shareholder, Nevada reportedly provides broad protections for directors and officers in many scenarios. 

Musk recently transferred the incorporation of his brain chip implant company, Neuralink, from Delaware to Nevada.

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