Recently, several prominent companies, including Tesla and SpaceX, have begun to exit Delaware in favor of states like Texas and Nevada, a movement dubbed "Dexit." Frustration with Delaware's legal environment, particularly concerning CEO compensation packages, has been voiced by industry leaders including Elon Musk and Bill Ackman. Musk's complaints were intensified following a court ruling against his executive pay, leading shareholders to vote for incorporating Tesla in Texas. Experts suggest that as more companies leave, the momentum for others to do the same increases.
Musk's frustration with Delaware became even more evident after Chancellor McCormick refused to consider the decision of TSLA shareholders, who ratified the CEO's pay package during its 2024 Annual Meeting of Stockholders.
I think there is a lot of pressure on Delaware, and I think the more moving, the easier it becomes for others to move, said University of Virginia Law School professor Michal Barzuza.
Never incorporate your company in the state of Delaware," he posted on X in January 2024.
We are reincorporating our management company in Nevada for the same reason. Top law firms are recommending Nevada and Texas over Delaware, Ackman wrote.
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