The legal corporate governance community is unmoved by Elon Musk’s call for companies to dump Delaware as their home state after his historic $55.8 billion pay plan was basically thrown in the trash by a judge in that state’s famed chancery court.
The ruling occurred as the result of a challenge to the Tesla CEO’s compensation package, which made him the richest man in the world over a stunning four-year run-up in Tesla results. According to Harvard professor of law and economics John Coates, this kind of thing just happens sometimes in “the First State.”
“Over the past 100 years, Delaware has periodically irritated one or two executives by enforcing the law, and even led some prominent lawyers to call for companies to move elsewhere from time to time,” Coates told Fortune, adding that he was “confident Delaware will not lose significant numbers of incorporations as a result of this one decision, as uninhibited as Musk is.”
Still, Musk’s call has brought some negative attention to Delaware rulings and raised questions about overreach.