Elon Musk's Pay Package and the Threat to the Delaware Corporation

If you look at prospectuses and earnings documents for almost any company, you're going to see a Delaware address. For more than a century, the state has been the place to go to if you're setting up a business. And in fact, Delaware has catered to these corporate clients, setting up an efficient chancery court to settle corporate disputes and producing a huge backlog of case law to act as reliable and efficient precedent. But suddenly, some companies are choosing to leave the state. Most prominent among them is Elon Musk's Tesla, which opted to re-incorporate in Texas after a Delaware judge invalidated his $56 billion pay package. States like Nevada and Texas are now also actively courting companies by enticing them with management-friendly laws. In this episode, we speak with Ann Lipton, University of Colorado law professor and Lawrence W. Demuth Chair, to find out what's at stake in the fight for incorporations and if there's a risk for a race to the bottom in terms of shareholder accountability.

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