Delaware has long been known as the corporate capital of the United States, but recent developments suggest that its grip on the corporate world may be slipping. Frustrated CEOs, following in the footsteps of Elon Musk, are looking to leave the state’s Chancery Court and reincorporate elsewhere—a movement that has been dubbed as “Dexit.”
Companies like Meta, Dropbox, Pershing Square, Trade Desk, Fidelity National Financial, and Sonoma Pharmaceuticals are considering exiting Delaware and incorporating elsewhere, according to a report by Yahoo Finance. These companies would join Musk’s Tesla, SpaceX, Boring Company, Neuralink, and X, which have already left the state. Musk’s decision to leave Delaware came after Chancellor Kathaleen McCormick struck down his 2018 pay package, despite all its targets being achieved.
Musk has not been shy about expressing his frustration with Delaware’s courts, advising others to never incorporate their companies in the state. His dissatisfaction peaked when Chancellor McCormick refused to consider the decision of Tesla shareholders who approved his pay package during the 2024 Annual Meeting of Stockholders. As a result, Tesla shareholders voted to reincorporate the company in Texas instead of Delaware.
Experts have weighed in on the situation, with University of Virginia Law School professor Michal Barzuza noting the pressure on Delaware and the ease of moving to other states. Pershing Square CEO Bill Ackman announced his decision to reincorporate in Nevada, citing recommendations from top law firms to choose Nevada and Texas over Delaware. Coinbase chief legal officer Paul Grewal echoed similar sentiments, expressing concerns about Delaware losing its status as the leading state of incorporation for American companies.
The stakes for Delaware are high, as the state has long attracted companies with business-friendly laws, a specialized court, and easy filings. Incorporation fees are a significant part of Delaware’s economy, bringing in $1.33 billion in 2024. However, rival states like Nevada, Texas, and Wyoming are now competing with their own pro-business pitches, threatening Delaware’s dominance.
New Delaware Governor Matt Meyer is taking steps to address complaints about the Chancery Court, acknowledging concerns from companies and attorneys about not receiving a fair hearing. With the corporate exodus gaining momentum, Delaware faces the risk of losing its long-standing reputation as the go-to state for incorporation.
In conclusion, Delaware’s corporate throne is under threat as more companies follow Elon Musk’s lead and choose to leave the state. The “Dexit” movement highlights growing dissatisfaction with Delaware’s courts and a shift towards more business-friendly states. It remains to be seen how Delaware will respond to this challenge and whether it can retain its position as the top choice for corporate incorporation in the United States.