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If Elon Musk and his buddies think Delaware is too strict, we've got a problem

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If Elon Musk and his buddies think Delaware is too strict, we've got a problem


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There’s a piece in today’s Wall Street Journal about how billionaires like Elon Musk are now whining about Delaware—which literally has more corporations than people—because it imposes too many rules. Musk is fretting because a Delaware business court ruled that his $50 billion-plus Tesla compensation package, which was approved by a loyalist board, was excessive and therefore unfair to shareholders who had sued to stop it. 

As the New York Times reported, the judge deemed the approval process deeply flawed” and voided Musk’s contract, calling it “the largest potential compensation plan in the history of public markets.” 

The Times noted in a follow-up piece that Musk owns about 411 million Tesla shares, worth around $78 billion, and that he’d pledged 238 million shares for personal loans. Borrowing against their vast portfolios, as ProPublica has detailed, is how Musk, Jeff Bezos, Michael Bloomberg, Warren Buffett, and other ludicrously wealthy Americans have managed to legally avoid the lion’s share of income taxes. 

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Musk publicly lamented the Delaware decision that would dislodge him from the “world’s richest man” perch. He says he’ll seek to reincorporate in Texas, where Space X is headquartered, and where, as my colleague Abby Vesoulis reports, Musk has been flexing his plutocratic power at the expense of longtime residents.

The Journal points out that Musk isn’t the only major shareholder chafing at Delaware’s rules, noting that Texas is among the newbies vying to attract more corporate registrations and that another contender, Nevada, offers “broad protections for directors and officers in many cases that Delaware wouldn’t, including involving improper personal gain.”

A state going out of its way to protect corporate crooks may shock you—or should—but Musk’s hissy fit is merely the latest skirmish in the race to the bottom for state corporate oversight. Both Vesoulis and Casey Michel, author of the book American Kleptocracy, detailed in our American Oligarchy package how competition between states to attract companies—which tend to overpromise and under-deliver on jobs and economic development—has resulted in a downward spiral that gives unelected billionaires power over local affairs and has made the United States the go-to destination for illicit wealth, foreign and domestic. 

Need a tax haven? A place to hide and launder stolen cash?  Why bother with the Caymans or the Bahamas when you can get those services in South Dakota—and you don’t even have to relocate there. If you’re looking for other options, check out Alaska, Illinois, Florida, Ohio, Missouri, Nevada, Florida, New Hampshire, Rhode Island, Tennessee, Wyoming, and the original culprit: Delaware.

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During the 1910s, Michel writes: 

Not only did Delaware’s legislature up the ante on enticements—exempting corporations from taxes and reimbursing their directors for damages incurred by litigious shareholders—but its Chancery Court began producing the most pro-corporate rulings in the country. For good measure, the state also granted anonymity to anyone who wanted to register a company there.

By 1929, 42 percent of state income came from corporate registration fees and taxes. With a population of a tad more than 1 million, Delaware is now home to 1.9 million corporations, including more than 300,000 registered in 2022 alone. Each year, it rakes in some $2 billion in corporate taxes and fees, far more than any other state. The constituents of Delaware lawmakers, “in a very real sense, are companies,” as the University of Cambridge’s Jason Sharman, an expert on money laundering and corporate regulation, has noted.

Now Texas is in the running too? All I can say is, when a few overpaid moguls can move the impunity needle by griping that Delaware isn’t permissive enough, we’ve got a problem. 





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Delaware

Delaware Supreme Court upholds reforms to curb ‘DExit’ concerns

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Delaware Supreme Court upholds reforms to curb ‘DExit’ concerns


This story was produced by Spotlight Delaware as part of a partnership with Delaware Online/The News Journal. For more about Spotlight Delaware, visit www.spotlightdelaware.org.

A Delaware law passed last year in the wake of escalating assaults on the state’s corporate brand shielded powerful company leaders from facing certain lawsuits brought by smaller investors. 

What it didn’t do was violate the Delaware Constitution, the state Supreme Court ruled on Friday, Feb. 27. 

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More than three months after hearing arguments, the justices ruled that the corporate law reform – known as Senate Bill 21 – did not strip Delaware’s prominent Court of Chancery of its constitutional authority to decide when a business deal is fair.

“The General Assembly’s enactment of SB 21 falls within the ‘broad and ample sweep’ of its legislative power,” the justices stated.

The ruling ends a bruising fight in Delaware over when the state’s business court should allow small-time investors to interrogate insider deals struck within companies by founders or other business leaders.

The ruling also averts what could have been an embarrassment for the state’s legal and political establishment had the high court overturned the law. 

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More than a year ago, Tesla CEO Elon Musk — the world’s richest person — was calling on business leaders to move their companies’ legal homes out of Delaware. Musk had launched the campaign, which became known as “DExit,” after a Delaware Chancery Court judge ruled that he could not accept a multibillion-dollar pay package from Tesla.  

Just as the campaign appeared to be gaining a foothold, Gov. Matt Meyer, legislative leaders, and Delaware attorneys who represent corporations threw their collective heft behind SB 21.

They argued then that the legislation amounted to a “course correction” that would bring the state’s business courts back into alignment with rulings from a decade ago. Many also said the bill was needed to pacify executives who were considering following Musk’s calls to move their companies’ legal homes out of Delaware.

In response, a cadre of critics — which included national law professors, pension fund attorneys, and a handful of progressives within the Delaware legislature — derided SB 21 as a “billionaires bill.” 

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Some also argued that the legislation was the latest in a string of recent changes to Delaware corporate law that have shifted the state away from protecting shareholder rights and toward giving greater deference to powerful executives.

Meyer and others SB 21 supporters rejected those characterizations last year. And on Friday, he celebrated the Supreme Court’s ruling.

In a statement, he said the decision affirms that “Delaware is the gold standard locale for global companies to do business.” He also stated that the number of companies that maintain their legal home in Delaware had increased throughout 2025 despite the DExit campaign.

“In short, SB 21 is working, and I’m glad it will continue to be the law,” Meyer said.  

The legal arguments for SB 21

When arguing against SB 21 in front of the Supreme Court last fall, one attorney asserted that the new law removed the Chancery Court’s time-honored and constitutional duty to say what is fair – or equitable – in a business dispute.  

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The attorney, Gregory Varallo, argued that by removing a shareholders’ ability to sue their company, the law reduced what he described as the immutable power of the Court of Chancery to oversee a “complete system of equity.”

During his arguments, Varallo also offered the justices an unusual acknowledgement, stating that he knew that his stance was unpopular — and that he understood “well the pressures on this court.”

The comments were a likely reference to the consensus of big business groups and the state’s political establishment that believed SB 21 was necessary for Delaware to remain the world’s preeminent corporate domicile. 

Following Varallo, Washington, D.C.-based attorney Jonathan C. Bond defended SB 21, in part, by characterizing his opponents arguments as unprecedented. If adopted, he said they would imperil several existing Delaware laws that go back decades. 

He also argued that changing the rules of corporate law – as SB 21 did – “is the same as wiping out jurisdiction merely because it makes some plaintiff’s claims harder.”

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Also arguing in favor of SB 21 during the hearing was William Savitt, an attorney with the  Wachtell, Lipton, Rosen & Katz – among the most prominent corporate law firms in the country.

Last spring, Meyer hired Savitt’s firm to represent the state in the legal defense of SB 21 for a budget rate of $100,000. By comparison, Wachtell Lipton charged Twitter $90 million in 2022 to ferry that company through its arduous, four-month-long acquisition by Elon Musk.

Wachtell’s client list also includes Mark Zuckerberg and other Meta executives and board members, who last summer settled a seven-year-long, multibillion-dollar shareholder lawsuit in the Delaware Chancery Court.

During his arguments on SB 21, Savitt said equity as determined by judges must follow the statutes created by the legislature, and “not displace the law.” 

“No natural reading of the words (of the Delaware Constitution) support plaintiff’s position,” he said. 

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Delaware

Police identify victim of Wilmington motorcycle crash

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Police identify victim of Wilmington motorcycle crash


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State police identified 29-year-old Brian Silva of New Castle as the victim of a fatal motorcycle crash in Wilmington.

Silva was riding a Harley-Davidson northbound on Dupont Highway approaching Millside Drive in Wilmington around 3:30 p.m. on Feb. 27 when it collided with the rear of a stopped Lexus at that intersection, police said. Silva was ejected from the motorcycle. He was taken to the hospital, where he died.

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Delaware State Police are still investigating this incident, and anyone with information is encouraged to reach out to them or to Delaware Crime Stoppers.



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Delaware

When will Delaware warm up? After snow, ice Tuesday, temps will rise

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When will Delaware warm up? After snow, ice Tuesday, temps will rise


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Meteorological winter has ended and we’ve entered spring.

However, there’s still a last winter blast hitting Delaware early this week before a spring warm up hits at the end of the week.

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Here’s a look at the Delaware forecast.

Will Delaware see more snow?

After a brisk Monday, March 2 with sunny skies and highs only reaching 35 degrees, there’s a chance of snow after 1 a.m. Tuesday, March 3 with freezing rain after 4 a.m. in New Castle County. Snow and freezing rain are expected before noon Tuesday, March 3. The county may receive less than a half inch of accumulation.

In Kent County and Sussex County, there’s a chance of snow and freezing rain after 1 a.m. Tuesday, March 3.

When will it warm up in Delaware?

It will start feeling like spring as warmer air moves into the First State on Tuesday evening, March 3, but wet weather is coming as well.

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Rain is predicted from Tuesday, March 3 through Friday, March 5, but spring-like temperatures will make it bearable. In New Castle County temperatures will range from the mid-50s on Wednesday, March 3 to the 60s on Thursday, March 4 and Friday, March 5. Kent County should see temperatures in the 60s and Sussex County will see 70s during the mid- to later part of the week

What’s the weekend forecast?

Remember when you were daydreaming about warm weather during the polar vortex or blizzard? Well, it is coming next weekend.

The forecast is calling for sunny to partly sunny skies throughout Delaware on Saturday, March 7 and Sunday, March 8. Highs will reach the upper 60s in the north to the low 70s in the south.

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