Delaware's new Democrat governor vowed to work to win back companies leaving the state due to numerous shareholder lawsuits and perceived liberal judicial activism.
Elon Musk called on companies to reincorporate elsewhere after a Delaware judge ruled in January 2024 that the CEO was not eligible for a 2018 compensation package then valued at $56 billion. In December, Delaware Chancellor Judge Kathaleen McCormick confirmed her previous ruling.
Musk moved both Tesla and SpaceX from Delaware to Texas last year.
Billionaire Bill Ackman, CEO of Pershing Square Capital Management, said in an X post Saturday that he planned to move his management company out of Delaware to reincorporate in Nevada or Texas.
The Wall Street Journal reported Friday that social media giant Meta, parent company of Facebook, has been in talks with Texas about reincorporating in that state and pulling out of Delaware.
Gov. Matt Meyer, who was elected to office in November, told Business Insider he would try to lure back companies that leave the First State.
"Any company thinking about leaving, we're actively reaching out, we're talking to them, we're understanding what the issues are and understanding what ways we can do better," Meyer told the outlet.
"And for those entities that have already made the decision to leave, we're going to continue to work hard to earn their trust and hopefully to have them come back."
Delaware's Division of Corporations shows that nearly 2.2 million entities, including two-thirds of all Fortune 500 companies, are registered in the state.
"The fact is Delaware is the best location in the world for a company to incorporate," Meyer told Business Insider, "and that's thanks to our legal expertise dating back to 1792. But let's be clear: If any entity leaves Delaware, we're going to work to win them back."
That might be difficult to do in some cases.
"Any lawyer still recommending incorporation in Delaware at this point should be sued for malpractice," Musk posted on X in reference to Ackman's statement. "Texas or Nevada actually respect shareholder rights."
Meyer said his state needs to address issues such as the balance of shareholder and management rights.
"It's really important we get it right for Elon Musk or whoever the litigants are in Delaware courts," the governor told Business Insider. "We're cognizant that there may be some things that need to change. We're going to work on them."
Meyer added that he already had met with "leading corporate legal brass" and lawmakers to discuss potential changes.
"I think within the coming weeks, you're going to see some things rolled out that will help move our state forward and bring us into 2025 and beyond to make sure we're protecting and growing the corporate franchise," he said.
Charlie McCarthy ✉
Charlie McCarthy, a writer/editor at Newsmax, has nearly 40 years of experience covering news, sports, and politics.
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