WILMINGTON, Delaware: Elon Musk's latest pay deal at Tesla shows how dramatically the rules of the game can change depending on where a company calls home. After reincorporating in Texas, Tesla's board has drawn up a record-shattering US$1 trillion compensation plan for its CEO.

This package would have been almost impossible to defend under Delaware's stricter corporate law.

The move away from Delaware came after a judge there ruled Musk's earlier $56 billion package "unfathomable" and unfair to shareholders. Musk urged other firms to abandon Delaware, while Tesla's directors got to work on a new deal.

Texas law has given Tesla more leeway. The state now allows companies to require shareholders to hold at least three percent of stock before they can sue — a threshold only Musk and a few big passive investors like Vanguard, BlackRock, and State Street can meet. That makes it much harder for small shareholders to challenge board decisions or question the independence of directors who approved the plan.

Unlike in 2018, Musk will also be allowed to vote his 13.5 percent stake, or about 411 million shares. Given that 529 million shares voted against ratifying his last package, Musk's voting power this time is expected to help secure approval.

Tesla shareholders had tried to ratify Musk's 2018 deal to override Delaware's court ruling, but the judge said their vote could not undo her decision. That ruling, and her order striking down the original $56 billion plan, are still under appeal.

The new Texas protections mean Tesla doesn't need to bar Musk from voting his shares, as it once did to prevent lawsuits under Delaware law. "They are completely insulated from a shareholder lawsuit in Texas," said Ann Lipton, professor at the University of Colorado Law School.

Not everyone is convinced. The New York State Comptroller criticized the 3 percent lawsuit threshold in Tesla's proxy statement, calling it a "bait-and-switch" that misled investors about how their rights would be protected after the move from Delaware. The comptroller is asking Tesla shareholders to repeal the bylaw at the annual meeting, where Musk's massive new pay package will also be on the ballot.

Some investors remain uneasy about the payout scale, while Tesla maintains that Texas law and the new framework give the company stability. For skeptics, Lipton says the choice is straightforward: "If shareholders do not like the pay package proposal, they still have an option. Sell."