Tesla Motors - The Early Years

[Arnold Panz]

Yes, Delaware is very friendly to outside companies incorporating there. Microsoft is a Delaware company, even though they were founded and are still headquartered in Redmond, WA. Perhaps there is some logic to Tesla Motors - considered the software company of automakers - being incorporated in the same state as Microsoft and others.

Most companies, particularly big ones (public or intending to go public), incorporate in Delaware. The law is very favorable in Delaware, and because of its historial role as the place to incorporate, very well developed in the areas important to companies. Among other things, Delaware law provides tremendous leeway to management and the Board of Directors in terms of the "business judgment rule", which essentially allows the individuals who make decisions for the company to avoid having claims brought against them by shareholders if those decisions turn out to be poor ones. There were other benefits historically to incorporating in Delaware (taxes and such), but that is now one of the main reason companies continue to incorporate there even if they have no other relationship to the state.

[TEG]

Some bits of history here:

• Tesla Motors IPO Rises 41% First Day Of Trading, Raises $226.1 Million!
• http://www.gsb.stanford.edu/cgrp/res...RP15-Tesla.pdf
• Popular Science - Google Books
• Tesla History

[Bud]

TEG, great links! I logged in to offer the Stanford Business School link, but it was already here.

It looks like the Chairman had a very nice payday in 2009.

While I’m here, here’s a different link: Confinity - Wikipedia, the free encyclopedia It looks like he’s just as much the creator of Pay Pal as he is of Tesla Motors.

[neroden]

Among other things, Delaware law provides tremendous leeway to management and the Board of Directors in terms of the "business judgment rule", which essentially allows the individuals who make decisions for the company to avoid having claims brought against them by shareholders if those decisions turn out to be poor ones.

The Delaware courts have had particularly "generous" interpretations of this rule, too, deciding that management self-dealing which doesn't pass the smell test is within the parameters of "business judgment". Stuff which German corporations would never get away with.