The Scoop
Late last month, a small group of influential corporate attorneys told Delaware legislators that blue-chip companies including Walmart were considering moving their legal homes out of the state, people familiar with the matter said.
The message was a wake-up call for a state whose economy depends on corporate fees, and a sign that the revolt set off by Elon Musk — who moved Tesla from Delaware to Texas last year — could be spreading beyond MAGA-friendly tech CEOs.
Delaware has for decades had a monopoly on how America’s biggest companies are run. It is the legal home to two-thirds of US public companies, giving it outsize influence on everything from executive pay to takeovers.
That power has been under threat. Conservative ideology and a disdain for judges seen as activists has spurred Musk, Mark Zuckerberg, and others to move the companies they run to politically friendlier climes. Musk moved Tesla to Texas after the chief judge of Delaware’s special business court negated his $55 billion pay package for the second time, in a closely watched case that is now on appeal. Zuckerberg has considered moving Meta to Texas, The Wall Street Journal reported. His friend and fellow Meta board member, Drew Houston, reincorporated Dropbox in Nevada, where Bill Ackman, another MAGA convert, is planning to move his investment firm.
The seriousness of Arkansas-based Walmart’s threat — which was delivered to state legislators by a small group of corporate lawyers — remains unclear. But it was grave enough to spur the Delaware legislature to overhaul its corporate law, the people said. Changes proposed last month, which are now being fast-tracked through the legislature, would give controlling shareholders largely unchecked power and protection from shareholder lawsuits.
A Walmart spokesman declined to comment.
A quarter of Delaware’s state revenue comes from company fees, and millions flow indirectly from law firms and corporate services, which makes state officials sensitive to their complaints.
“What these companies want is for there to be no possibility for a shareholder or a court to review their conduct,” said Mark Richardson, who represents shareholders in lawsuits. “Catering to those extreme views to please a few corporations is a terrible mistake for Delaware that will destroy the franchise in the long run.”
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Walmart isn’t a Silicon Valley giant, but it resembles Tesla, Meta, and other companies that have turned on Delaware in two key ways: It is controlled (by the Walton family) and it has paid hundreds of millions of dollars to settle or defend shareholder lawsuits there, including related to its alleged role in the opioid crisis and foreign bribery.
“It’s not simply controlled companies with rockstar CEOs” that are considering leaving, Democratic State Sen. Bryan Townsend, who sponsored the legislation, said in an interview. He declined to comment on conversations with specific companies but said he had heard complaints from “large, widely held public companies” and startups choosing where to set down roots — the next generation of Delaware’s corporate citizens.
Townsend compared the situation to a bank run: “The first few people who pull their money out might have really good reasons,” he said. “But once it becomes a group mentality, it’s not really about the first people anymore. It’s about what’s happening to the overall system.”
Two former top Delaware judges now in private practice at powerhouse corporate law firms conveyed business concerns to the state legislature and the governor, and had a heavy hand in drafting the bill over a weekend last month, people familiar with the matter said.
Liz’s view
Musk, Zuckerberg, Ackman and other executives are MAGA-friendly, skeptical of coastal judges, and control their companies through super-voting stock or personal sway. Their huffy exit from Delaware could be easily dismissed as tech bros throwing tantrums.
But what started as a protest movement by politically motivated moguls could easily turn into a broader — I apologize — “Dexit.” Plenty of corporate executives think Delaware has tilted too far toward shareholder rights in recent years. As with other issues, Musk & Co. have tapped into and amplified existing grievances to satisfy personal agendas and force institutions to bend.
The consequences are still unclear — for both sides. Musk and others may not like recent case outcomes, but the Delaware Chancery Court has decades of precedent and sophisticated judges versed in business law. “Just wait until Elon Musk gets in front of a Texas jury,” Stuart Grant, a longtime plaintiffs’ lawyer in Delaware, told me.
Room for Disagreement
There’s no evidence of a stampede for the exits. Delaware added 85 new public companies last year, secretary of state data shows. And nearly 90% of startups still incorporate there, according to Carta. The rest mostly incorporate in their home states.
“That tells me you’re either going to Delaware, or you didn’t know you should be going to Delaware,” said Peter Walker, who runs Carta’s data team.
