Tesla Inc. (NASDAQ:TSLA) CEO Elon Musk on Wednesday renewed his attacks on Delaware's corporate regime after Coinbase Global Inc. (NASDAQ:COIN) said it will follow Tesla and SpaceX in abandoning the state as its legal home and reincorporate in Texas.
Elon Musk Escalates Warnings To Companies
Reposting Coinbase legal chief Paul Grewal's update on X, Musk wrote, "Delaware continues to bleed companies." A short time later, he escalated the warning with another post, which said, "Delaware needs to make major changes immediately or continue to lose its single biggest asset, which is being the incorporation state for most companies in America."
Grewal, in a Wall Street Journal op-ed on Wednesday, said Texas has become "an increasingly attractive hub for innovative companies like ours," adding, "It's a shame that it has come to this, but Delaware has left us with little choice." He cited increasingly "unpredictable outcomes" in Delaware's Chancery Court as a key factor in the move.
Texas Touted As New Hub For Innovators
Musk helped launch the so-called "Dexit" trend last year by reincorporating SpaceX and Tesla in Texas, following a Delaware ruling that voided his earlier $56 billion Tesla pay package. Now based in Texas, Tesla investors this month approved a new compensation plan that could be worth up to $1 trillion if aggressive targets are met.
Musk also used Wednesday's exchange to pitch Texas' capital.
Delaware Faces Mounting Departures
As noted in a CNBC report, Delaware remains the dominant incorporation state for public companies, long prized for its flexible corporate code and specialist Court of Chancery, which many governance experts say strikes a careful balance between executives and shareholders. Texas, meanwhile, has moved to court big corporations with new business courts and laws that make it harder for shareholders to sue directors for breaches of fiduciary duty.
Dropbox Inc. (NASDAQ:DBX), TripAdvisor Inc. (NASDAQ:TRIP) and Andreessen Horowitz are among other high-profile names that have recently announced exits from Delaware.
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