Delaware is poised to give corporate officers more protections in its courts against shareholder lawsuits after criticism by billionaire Elon Musk and other influential business titans that rattled top public officials in what they call the corporate capital of the world.
Lawmakers approved fast-tracked legislation Tuesday night backed by the Gov. Matt Meyer and Delaware business leaders. But shareholders' lawyers and pension funds slam it as a giveaway to billionaires and corporate insiders.
Here's a look by the numbers:
That is how many business entities call Delaware their legal home, according to the governor's office. Those entities include two-thirds of Fortune 500 companies, according to state officials. The number of business entities in Delaware has steadily grown, according to state figures. While most probably keep their corporate headquarters somewhere else, the companies handle their legal matters in Delaware’s experienced corporate law courts, which have a well-developed body of corporate case law and judges who all had experience in corporate law before they joined the bench.
That is Delaware's U.S. Census population estimate from last year — meaning that residents are outnumbered two-to-one by corporations registered there.
That is the percentage of all U.S. initial public offerings in 2024 that were registered in Delaware, according to the governor's office.
That is the amount of annual revenue that Delaware state government receives from corporate license fees and associated tax revenues, according to the governor's office. That pays for about one-third of the total state operating budget.
That is Delaware state sales tax rate — made possible, at least in part, by billions in revenue from corporate license fees and taxes. Only four other states had no state sales tax last year, according to the Tax Foundation. That rock-bottom tax rate helps make Delaware a destination for residents of neighboring states looking to make an expensive purchase.
That was the potential value of Musk's compensation package awarded by Tesla in 2018 and that a Delaware judge threw out last year after shareholders' lawyers sued.
The judge, Chancellor Kathaleen St. Jude McCormick, ruled that it had been developed by directors who weren’t independent of Musk and approved by shareholders who had been given misleading and incomplete disclosures in a proxy statement.
Tesla shareholders met again last June and voted to restore Musk's compensation package, then valued at $45 billion after it declined in value in tandem with Tesla's dropping stock value at the time.
But shareholders challenged it, and McCormick reaffirmed her ruling that required the company to rescind it. Musk and Tesla are appealing in Delaware's Supreme Court.
Musk's criticism — “Never incorporate your company in the state of Delaware,” he wrote on social media — inflamed corporate unrest that had been simmering the past couple years over various Delaware Supreme Court decisions in corporate conflict-of-interest cases, backers of the bill say.
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Follow Marc Levy on X at: https://x.com/timelywriter.
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