On Friday, Newsmax reported that Walmart is considering leaving Delaware as the state of its incorporation.
The article reports:
Walmart is among the latest and biggest companies considering leaving Delaware as its location of incorporation.
A small group of corporate attorneys last month told Delaware legislators that blue-chip companies including Walmart were considering moving their corporate legal residences out of the state, Semafor reported.
The news is said to have Delaware’s political and business leaders reeling.
The small state of Delaware with just over 1 million people derives more than one-third of its state budget from corporate legal fees, not to mention the far greater impact corporation business has on the economy.
There is a reason for this exodus:
Billionaire Elon Musk began the corporate stampede when he moved multiple companies out of Delaware, including Tesla, SpaceX and Neuralink.
The move came after Delaware Chancellor Judge Kathaleen McCormick, a Democrat, ordered Musk to give up a compensation package valued at $55.8 billion, though it was twice approved by shareholders.
The ruling followed McCormick’s January 2024 decision that called the Musk pay package excessive and rescinded it.
The move surprised investors and cast uncertainty of the state’s long-held position as a neutral corporate arbiter.
Despite painting Musk’s compensation as greedy, McCormick did award the trial lawyers who sued Musk a staggering $345 million for their legal filings.
At issue for Musk, Fortune 500 CEOs and entrepreneurs across the U.S. is that the Delaware Court of Chancery has become a haven for shareholder lawsuits and left-wing judicial activism.
Musk was not happy with McCormick’s ruling and took to X, writing, “Shareholders should control company votes, not judges.”
Another Musk repost stated: “Things to do in Delaware: 1) Leave.”
Musk has also urged other companies to quit Delaware as well.
“Never incorporate your company in the state of Delaware,” Musk wrote on X.
The courts should not be able to override the wishes of the stockholders in a privately held company. Actions have consequences.