TripAdvisor Wants To Move To Nevada, And That May Stop Tesla From Moving To Texas

TripAdvisor started 24 years ago and was an amazing tool. It had reviews of almost every hotel. And it hosted real guest photos of the hotels, too. You couldn’t always trust the reviews, because people complain about different things (you’d always see bashing of the Ritz-Carlton Central Park for high room service prices) but you could (1) look for consistent themes across reviews, and (2) look at the photos – if you saw dilapidated rooms and mold frequently that was a bad sign.

Then TripAdvisor was acquired and became part of the same company as Expedia. It was later spun off as a public company. It earns most of its revenue from Expedia and, selling eyeballs of customers searching hotels to those platforms. Even reviews got de-prioritized. It stopped being primarily a tool to help customers figure out where to stay.

Now there’s corporate intrigue over where TripAdvisor itself should find lodging. Can it move from Delaware incorporation to Nevada? And what a judge says there may decide whether Tesla can leave Delaware, too, after a judge struck down Elon Musk’s $55 billion compensation package.

  • elaware has specialized judges, non-jury trials, and a tremendous history of caselaw for corporate disputes. That provides tremendous certainty and low costs, and businesses like it. The state makes 62 times the national average in incorporation fees.

  • Texas has a new court being created September 1 to take on Delaware. Nevada has already been aggressive attracting corporate registrations.

  • Elon Musk wants to leave Delaware after its court struck down his $55 billion incentive pay package. His pay was approved by shareholders, and it’s a small percentage of gains made by stockholders. But a small group of shareholders sued, arguing that the approval wasn’t a fully-informed one, sought by conflicted directors. Musk now says he wants to move to Texas.

TripAdvisor wants out of Delaware for potentially similar reasons as Musk. While the state is considered very business-friendly, Nevada is better for self-dealing where directors are harder to sue. The move was basically approved by chairman Greg Maffei, whose holdings put him in a dominant position. (Only 5.4% of shareholders other than Maffei supported the move.)

A majority of smaller shareholders don’t like the TripAdvisor move to Nevada:

Maffei also has a history of being sued over allegations of seeking to benefit at the expense of minority shareholders, the plaintiffs argued, pointing to a half-dozen cases alleging conflicts of interest in recent years in which Delaware’s Chancery Court ruled against the executive. Settlements yielded about $300 million in four of those cases, the lawsuit says.

Matt Levine explains that TripAdvisor says any shenanigans are purely theoretical, and that Delaware’s court should therefore defer to the business judgment of its directors. They shouldn’t intercede under precedent where majority shareholders owe a duty to minority shareholders, since there’s no showing their rights are being violated.

However, this defense may not be available to Elon Musk when he tries to move to Texas. He’s clearly talking up leaving because Delaware courts said his $55 billion pay package wasn’t in the best interests of minority shareholders.

It seems wrong to me that a Delaware judge struck down a pay package approved by shareholders, and where shareholders clearly benefited (based on appreciation of Tesla stock under Musks’s leadership). It would seem even stranger for a Delaware judge to block the company from leaving the state and re-incorporating in Texas.

However Delaware law protects minority shareholders, and the reason for the move would be to benefit an insider at what has already been determined by a judge to be actions that harmed minority shareholders.

TripAdvisor, on the other hand, began its decline when it was acquired by IAC/InterActiveCorp. Spinning it off from Expedia a dozen years ago hasn’t made it better (shockingly, because distance of anything from Expedia should make that thing better). So I’m torn.

  • Delaware law hasn’t protected TripAdvisor, so no harm in leaving?
  • Current management of TripAdvisor have made it worse, making it even easier for them to self-deal with its assets seems like a bad idea?

Ultimately, if TripAdvisor is stopped from leaving Delaware then Tesla won’t be able to. But the case against Tesla leaving could be stronger. Even if judges stopping companies from leaving a state to re-incorporate in another state isn’t something that usually happens.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »


  1. The Delaware ruling was really egregious not even factoring in the majority of shareholders supporting the compensation package. Like I’ve said before, laws are nothing more than opinions and one judge made an arbitrary and capricious ruling and justifies it with whatever judicial framework she pulled out of thin air. Based on the reports that came out, it is logical to question if the judge does not have a personal bias against Elon.

    What’s so ridiculous is that Tesla shareholders gets shafted with this decision but the shareholders of GM or AA with bad management that has condemned shareholders to negative returns over the last 10 years never gets held accountable by any courts for harming shareholders and acting against their interests. Mary Barra at GM earns $20 million a year for a stock price that’s move nowhere since 2018.

  2. Regarding the TripAdvisor move, my question is: what is moving?”

    Is it simply the state of incorporation, or is it the headquarters/employees, which is located in Needham MA. If it is the state of incorporation that is simply a matter of legal paperwork; moving a headquarters is far more complicated.

  3. Does any of this matter? Last time I checked Wilmington wasn’t exactly a hotspot for corporate HQs.

    South Dakota is home to a lot of major banks but Bismarck doesn’t have a skyline full of bank headquarters.

  4. Wasn’t SeatGuru wrapped up in this process as well? What’s its status? I’ve been told SeatGuru is totally not updated.

  5. Whether or not the compensation package aligned executive and shareholder priorities in a way that led to wealth creation was not the subject of the lawsuit. This was about self-dealing. There is a process in corporate law to handle situations of self-dealing; this particular executive tends to believe that laws are merely gnats buzzing about his path to greatness and ignored them. That was the problem. If other states are more lenient towards executive self-dealing, shareholders should run.

  6. @T. Magee

    Bismarck is in North Dakota, not South Dakota.
    There was a documentary somewhere (CNBC/Fox Business?) about why South Dakota had become the “big” one for credit card companies (something about the interest?) So your statements used to have a South Dakota address. Not sure if that’s still the case or not.

  7. Delaware could fail to recognize a move to Texas or Nevada, but that won’t stop Texas or Nevada from recognizing the move. In other words, who cares what Delaware thinks about where Tesla or Tripadvisor is incorporated in? This will eventually go to the Supreme Court and they will have to decide whether a state has the authority to nullify a corporation’s move/incorporation to another state. I highly doubt that the answer to that will be a “yes”.

  8. @jnonis

    Actually it’s a Frontline report on PBS about how South Dakota, formerly known for Prairie Populism, abolished usury limits so banks could charge mafia inspired rates on credit cards by being incorporated in South Dakota.

Leave a Reply

Your email address will not be published. Required fields are marked *