What lies ahead for Delaware in its rocky year?
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2024 marked a significant year for Delaware. For the first time since anyone can remember, people started to seriously doubt whether Delaware would continue to be the go-to place for incorporating companies. The market was in a tizzy after several decisions made by the Delaware Court of Chancery. These seemed to shake the market’s confidence in the venerable predictability of Delaware law. A well-known CEO’s $50 billion compensation package was struck down, leading him to publicly declare “Never incorporate your company in the state of Delaware.” A well-known CEO had his $50 billion compensation package thrown out, which led him to publicly declare, “Never incorporate in Delaware.” There is still a feeling of unease, particularly in light of the recent perception that Delaware courts are hostile towards controlling stockholders. Several controlled companies have left Delaware for other jurisdictions, such as Nevada or Texas. In one case, the Delaware Court of Chancery determined that the decision to leave Delaware should be reviewed using the entire fairness standard. However, the Delaware Supreme Court accepted an interlocutory review (which is still pending).
