Elon Musk Blasts Delaware Court After $100B Pay Package Rejected – Sparks Corporate Exodus Threat

Elon Musk isn't just fighting for his massive pay package—he's taking on Delaware's entire legal system. 

After a Delaware judge struck down his nearly $100 billion compensation package from Tesla TSLA, Musk wasted no time criticizing the state's Court of Chancery, calling it "absolute corrupt." 

His frustration didn't stop there—Tesla has now reincorporated in Texas, and his fight has put a spotlight on Delaware's role as the preferred home for corporate America.\

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Delaware's Legal Reputation Faces Uncertainty

For decades, Delaware has been the top choice for business incorporations, with roughly 68% of Fortune 500 companies registered there. But with Musk leading the charge, other companies are reconsidering their ties to the state. 

Bill Ackman's hedge fund, Pershing Square, is planning a move to Texas or Nevada, and that reports say that Meta META is weighing a similar decision. Now, Delaware lawmakers are scrambling to stop what could become a corporate exodus.

To address growing concerns, Delaware lawmakers this month introduced Senate Bill 21, a proposal aimed at making the state's corporate laws more appealing to executives like Musk, Meta CEO  Mark Zuckerberg, and Ackman. 

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According to Reuters, the bill includes changes that would limit investor lawsuits against executives and redefine shareholder liabilities, making it harder for minority shareholders to challenge corporate decisions.

The push for reform comes as Delaware faces pressure to maintain its reputation as the go-to state for corporations. The state generates billions from business registrations and corporate legal fees, so keeping companies from leaving is a top priority.

Lawrence Hamermesh, professor emeritus at Delaware Law School and one of the bill's authors, told Fortune that Delaware needed to act fast. 

"An unprecedented exigent risk required an unprecedented expedited process," he said, emphasizing that many companies are currently reviewing proxy statements ahead of their shareholder meetings this spring—meaning decisions to reincorporate could happen soon.

See Also: Elon Musk Told The U.N. If They Could Show A Plan For Ending World Hunger He'd Donate $6 Billion – ‘I Will Sell Tesla Stock Right Now And Do It'

Not everyone is convinced Senate Bill 21 is the right move. According to The Financial Times, corporate governance expert Charles Elson argues that weakening shareholder protections could damage Delaware's credibility. 

He described the changes as a dramatic upheaval in norms in Delaware where typically courts develop transaction standards through opinions.

Ann Lipton, a professor in business law and entrepreneurship at Tulane University Law School and The Murphy Institute also weighed in, warning that altering Delaware's laws to accommodate a handful of billionaires could create a more volatile and less investor-friendly market.

For now, Delaware lawmakers insist the bill isn't about winning Musk back. State Sen. Bryan Townsend, the bill's primary sponsor, told Reuters that the goal is to ensure the state remains a corporate hub. 

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