Odd Lots Elon Musk's Pay Package and the Threat to the Delaware Corporation
55 snips
Sep 18, 2025 Ann Lipton, a law professor and expert in corporate law, discusses the implications of Elon Musk's $56 billion pay package being invalidated by a Delaware judge. She explains why Delaware has been the go-to state for incorporation and how states like Texas and Nevada are luring businesses with favorable laws. Lipton highlights historical cases influencing corporate decisions and the potential risk of a race to the bottom in shareholder accountability. Her insights raise questions about the future of corporate governance in America.
AI Snips
Chapters
Transcript
Episode notes
Delaware's Deliberate Chartering Strategy
- Delaware deliberately built a corporate-friendly legal ecosystem to attract incorporations starting in the late 1800s.
- It insulated corporate law from politics and made managers' authority broad and flexible.
Precedent Is Delaware's Network Effect
- Delaware's advantage rests on decades of predictable case law that other states look to when crafting corporate rules.
- That precedent gives companies a clearer sense of outcomes in disputes like takeover fights or proxy contests.
Ben Gorkum Forced Delaware's Code Change
- In the 1980s Delaware's Ben Gorkum ruling held directors liable for not getting the best sale price, which terrified boards.
- Delaware then amended its code to allow charter clauses shielding directors from monetary liability for negligence.