Now Bill Ackman and Mark Zuckerberg Threaten to Follow
Dear Friends,
It sounds like America’s First State’s new governor Matt Meyer is putting a harsh and bright spotlight onto the Chancery Court.
“My role as governor is to look at the system, make sure the corporate law is fair, make sure it’s predictable, make sure it’s clear and consistent, and make sure we’re making whatever changes are necessary” to improve it, Delaware’s Meyer told Bloomberg Law, in the story below.
I’d argue now and have argued for years that corporate law in Delaware has NOT been predictable. It has been anything BUT clear or consistent over the past decade! Instead, it has been dragged into the corrupt mud by Andre Bouchard or Leo Strine and current Chancery Court Chancellor Kathaleen McCormick.
After Phil Shaw and Elon Musk moved their companies from Delaware, now Meta Platforms Inc., known by many as its previous name, Facebook — plus Dropbox Inc. and Bill Ackman’s Pershing Square Capital Management consider doing the same.
Newly-elected Meyer told Bloomberg Law he is stepping in.
Former Governor John Carney did next to nothing, as I see it, to stop the revenue drain out of our beloved state and into states like Nevada and Texas. As companies move, the money once in Delaware, moves with it.
Carney did nothing over the decade as I shouted about this over and over, folks!
I applaud Meyer for tackling this HUGE problem. In my opinion, folks, the corruption has gone on too far and too long. NOW that Delaware is seeing how much it will hurt and has hurt the state revenue, they have no choice but to address this.
See the Bloomberg Law story below on what needs to be done. Please send your feedback on this, folks. It is always welcome and appreciated.
Respectfully Yours,
JUDSON Bennett–Coastal Network
Feb. 4, 2025, 3:01 PM EST
As Musk and Ackman Snub Delaware, Governor Looks at Court (1)
EXCLUSIVE
Mike Leonard
Legal Reporter
Jef Feeley
Bloomberg News
- Pershing Square, Meta and others consider moving legal homes
- Governor may propose changes to state’s famed business court
For more than a century Delaware has boasted the premier US business court, as legal home to most Fortune 500 companies and the nation’s biggest corporate battles.
Now that status is increasingly being challenged after Elon Musk moved his companies’ incorporation from the state and as Meta Platforms Inc., Dropbox Inc. and Bill Ackman’s Pershing Square Capital Management do or consider doing the same. Delaware’s new governor, Matt Meyer, says he is stepping in.
Meyer, a Democrat, said in an interview Monday that he is weighing changes to the way business disputes are handled in Delaware. He said the possible changes are based on feedback from executives, corporate lawyers and people suing in the state’s famed Chancery Court.
“My role as governor is to look at the system, make sure the corporate law is fair, make sure it’s predictable, make sure it’s clear and consistent, and make sure we’re making whatever changes are necessary” to improve it, Meyer said. “We need to win the future.”
Delaware Governor Matt Meyer
Photographer: Pamela Smith/AP Photo
Delaware has long been the preferred paper home for hundreds of thousands of corporations, LLCs and LPs. A major draw for the tiny state is the Court of Chancery. But after decades of dominance, a few executives, led by Musk, have been complaining about the system. And other states are seeking to challenge its status, like Texas, where officials launched their own version last year.
The highest-profile exit so far has been Musk’s. His move out of Delaware came after the court’s chief judge, Chancellor Kathaleen St. J. McCormick, rejected his multibillion-dollar Tesla Inc. pay package in a shareholder suit over it.
Read More: Musk’s Multibillion-Dollar Tesla Payout Is Gutted by Judge
Musk used his social media platform, X, to go after McCormick, the court and the state for not honoring the will of Tesla shareholders, who voted twice to approve his compensation award — the biggest ever. He urged other executives to move their companies as well, to states such as Texas and Nevada, where he said the laws were more amenable to management.
A representative for McCormick declined to comment.
Meta is considering multiple states for a possible reincorporation, Bloomberg News reported last week. Dropbox is moving its legal home to Nevada because of Delaware’s “increasingly litigious environment,” according to a filing with the US Securities and Exchange Commission.
Delaware has spawned “less meritorious and costly litigation and has the potential to cause unnecessary distraction to the company’s directors and management team,” Dropbox added.
Meanwhile, Ackman said on X Saturday that Pershing Square was reincorporating its management company in Nevada, adding in another post that the firm hadn’t yet made a final decision and was also considering Texas.
A Pershing Square representative had no comment on the posts.
Pershing Square’s Bill Ackman
Photographer: Jeenah Moon/Bloomberg
And on Tuesday the Delaware Supreme Court made it easier to shift incorporation out of the state, overturning a Chancery judge’s ruling that Tripadvisor’s Greg Maffei might have to pay monetary damages if the travel company’s reincorporation in Nevada lowers its value.
Delaware’s chancery judges are recognized as business law experts who hear cases quickly and efficiently without a jury. But Meyer said he has heard from critics that they didn’t always have a chance to appeal rulings against them at the trial level before they become final. The complaints weren’t limited to any one judge, he said. He declined to say whether he has had direct discussions with Musk.
Meyer said some companies don’t like the Chancery Court system in which subsequent cases involving a given litigant tend to be assigned to the same judge for efficiency, and judges are appointed by the governor rather than elected by voters.
“They know in some cases the judge has ruled against them in the past, and so they feel like the result of the case is a foregone conclusion,” the governor said. Musk has complained about McCormick, who is presiding over other cases involving him.
Depending on the changes he proposes, McCormick could choose to implement them, or the governor could push for legislation to enact them.
Depending on the changes he proposes, McCormick could choose to implement them, or the governor could push for legislation to enact them.
Chancellor Kathaleen St. J. McCormick
Photographer: Eric Crossan via AP Photo
Chancery Court has always had its critics, but none quite like Musk, according to corporate governance expert Larry Cunningham.
“People have lost cases in Delaware, and they’ve grumbled and criticized and maybe even told their lawyers not to recommend Delaware” to others as a corporate home, said Cunningham, director of the University of Delaware’s John L.
Meyer said Delaware still has a commanding lead as corporate home to American big business, and that 81% of the US companies that launched initial public offerings last year incorporated in the First State.
Despite its small size, Delaware is corporate home to more than 2 million businesses and more than 60% of Fortune 500 companies. Incorporation fees generated more than $2 billion for the state in 2022, or about a fourth of its annual budget.
Meyer, a lawyer himself, worked at Simpson Thacher & Bartlett on mergers and acquisitions. He represented the private equity firm Carlyle Group, among others. He also served as a diplomat in Iraq under former President Joe Biden.
(Adds new Delaware Supreme Court decision below Ackman photo, how governor could make Chancery changes above McCormick photo and expert analysis below it.)
–With assistance from Jennifer Kay (Bloomberg Law) and Crystal Tse.