Elon Musk's 'Dexit' sparks corporate exodus, threatens Delaware's business throne

02/20/2025 08:17 AM

Delaware’s corporate grip seems to be slipping. Frustrated CEOs, echoing Elon Musk’s frustrations with the state, are ditching the state’s Chancery Court and reincorporating elsewhere—a movement that has been colloquially dubbed as “Dexit.”

The “Dexit” Exodus:

• Meta, Dropbox, Pershing Square, Trade Desk, Fidelity National Financial, and Sonoma Pharmaceuticals have drafted up plans to potentially exit Delaware and incorporate somewhere else, as noted in a Yahoo Finance report. 
• These companies, if they do leave, would join Elon Musk’s Tesla, SpaceX, Boring Company, Neuralink, and X.
• The trend has been informally dubbed as “Dexit.”
• Musk’s companies left the state after Delaware Judge Chancellor Kathaleen McCormick struck down the CEO’s 2018 pay package after all its targets had already been achieved.

Musk’s warning: 

• Musk has been very open about his disdain over Delaware’s courts. “Never incorporate your company in the state of Delaware,” he posted on X in January 2024. 
• Musk’s frustration with Delaware became even more evident after Chancellor McCormick refused to consider the decision of TSLA shareholders, who ratified the CEO’s pay package during its 2024 Annual Meeting of Stockholders.
• Tesla shareholders have voted to reincorporate the company in Texas instead of Delaware during its last annual meeting.

Experts Weigh In: 

• “I think there is a lot of pressure on Delaware,” said University of Virginia Law School professor Michal Barzuza. “And I think the more moving, the easier it becomes for others to move.”
• Pershing Square CEO Bill Ackman was among the entrepreneurs who have opted to leave Delaware. In a post on X, he announced that he is leaving the state for Nevada.
• “We are reincorporating our management company in Nevada for the same reason. Top law firms are recommending Nevada and Texas over Delaware,” Ackman wrote.
• Coinbase chief legal officer Paul Grewal shared similar sentiments in recent weeks.
• “I’ve tried cases to Delaware juries, enjoyed friendships with Delaware judges, and taught classes to Delaware lawyers. The Hotel DuPont is a familiar stay, and I’ve bought too many shirts and ties to count at Wright & Simon in Wilmington. And so I share this with affection, not animosity:  Delaware is at serious risk of losing its standing as the leading state of incorporation for American companies,” Grewal wrote.

The Stakes for Delaware:

• For roughly a century, Delaware has lured companies with business-friendly laws, a specialized court, and easy filings. Due to these, the state hosts over two-thirds of Fortune 500 firms.
• Incorporation fees are a notable part of Delaware’s economy. In 2024, incorporation fees brought $1.33 billion to the state. 
• Delaware rivals like Nevada, Texas, and Wyoming are now muscling in with their own pro-business pitches.
• New Delaware Gov. Matt Meyer is digging into Chancery complaints.
• “I’m hearing something similar from a number of Delaware companies and attorneys. That they feel like they get the same judge every time when they come to Delaware business court, and they don’t feel like they are getting a fair hearing,” he told CNBC.

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