Mar 7, 2024 - Business

Delaware doubles down on defense of U.S. corporate legacy

Musk speaks during live interview with Ben Shapiro at the symposium on fighting antisemitism

Elon Musk: Photo: Omar Marques/Getty Images

The chief justice of the Delaware Supreme Court defended the state's legal legacy of providing the roadmap for U.S. corporate decisions and transaction terms, amid a burst of criticism aimed at its decisions.

Why it matters: Delaware is where most U.S. companies are incorporated, and any major departure could dilute and confuse standards set by the state's legal framework over the past several decades.

Zoom in: The spotlight turned to the Delaware system earlier this year when Chancery Court Chancellor Kathaleen McCormick ruled that Tesla CEO Elon Musk failed to prove that his $56 billion compensation was fair, voiding the package. The decision prompted immediate retaliation.

  • "Never incorporate in Delaware," he sent over X.
  • Musk has since threatened to reincorporate Tesla in Texas; the company has been headquartered in Austin since 2020.

What they're saying: "Let's all take a breath," said Delaware Chief Justice Collins Seitz at the Tulane Corporate Law Institute conference in New Orleans on Thursday.

  • "Delaware judges are rightly proud of their independence. Most litigants I dare say would not want it any other way," Seitz said, to the applause of more than 800 conference attendees packed into a Roosevelt Hotel ballroom, most of them corporate attorneys. Seitz was joined by Delaware lawyers for a late morning panel.

Flashback: Panelist Joel Friedlander, a Wilmington-based corporate lawyer, presented quotes dating back to the late 1980s that showed criticism of Delaware from executives who felt wronged and who pressed for an exodus from the state.

What's next: William Lafferty, a Wilmington lawyer who moderated the panel, warned that recent threats to Delaware judges and certain cases of harassment had gone too far.

  • Panelists hammered home the idea that efforts to move U.S. incorporation trends and decisions away from Delaware have happened for years, but none have taken hold.
  • "Delaware judges are not trying to win popularity contests," Seitz said.

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