Alarm Bells Ring as Delaware 'Radically' Shifts More Power to Corporate Insiders
"The Delaware lawmakers that enacted S.B. 21 are lapdogs for corporations and Musk," said one expert at the Open Markets Institute.
While Democratic Gov. Matt Meyer declared that "Delaware is the best place in the world to incorporate your business, and Senate Bill 21 will help keep it that way," critics reiterated concerns about the corporate-friendly state legislation he signed this week.
The Delaware House of Representatives sent the Senate-approved S.B. 21 to Meyer's desk on Tuesday in a 32-7 vote, with two members absent. The Delaware Business Times reported that the governor "arrived in Dover to sign the measure into law less than two hours after it passed," and "the bill signing was closed to the press."
The bill sailed through the Delaware General Assembly despite anti-monopoly, economic, and legal experts blasting it as a "corporate insider power grab" and accusing state legislators of choosing "billionaire insiders—like Elon Musk and Mark Zuckerberg—over pension funds, retirement savers, and other investors."
Delaware Working Families Party (WFP) political director Karl Stomberg said in a Wednesday statement that "at a time when rank-and-file Democrats across the country are begging their leaders to stand up to" President Donald Trump and Musk, his billionaire adviser, Democratic lawmakers in the state "just gave Musk a $56 billion handout."
That's a reference to Musk's 2018 compensation package for his electric vehicle maker, Tesla, which a Delaware judge ruled against, prompting the richest billionaire on Earth to ditch the state and encourage other business leaders to do the same. Fears of a potential "Dexit" led to lawmakers' frantic effort to pass S.B. 21.
"The Working Families Party has been standing up against this proposed bill for weeks now, and we recognize the need to fight back against corporate overreach in our government," said Stomberg. "WFP electeds proposed serious amendments to address our concerns with the bill that would protect the people of Delaware, but the Democrats chose to side with Musk and vote them down."
"This bill is an indictment of the failed Delaware Way, which continues to allow big corporations and the ultrawealthy like Elon Musk and Mark Zuckerberg to enrich themselves at the expense of working people," added Stomberg.
Zuckerberg is the CEO of Meta, Facebook and Instagram's parent company. CNBC recently revealed that "a day after The Wall Street Journal published its story on Meta considering a Delaware departure, Meyer, who was brand new to the job, convened an online meeting with attorneys from law firms that have represented Meta, Musk, Tesla, and others in shareholder disputes in the state, according to public records obtained by CNBC. Other attendees included members of the Delaware Legislature."
"The following day, records show, Meyer invited a second group to meet with him and new Secretary of State Charuni Patibanda-Sanchez. That invitation went to Kate Kelly, Meta's corporate secretary, and to Dan Sachs, the company's senior national director of state and local policy," according to CNBC. "The invite also went to James Honaker, an attorney with Morris Nichols, a firm that's represented Meta in federal court in Delaware, and to William Chandler, former chancellor of the Delaware Court of Chancery, who is now part of Wilson Sonsini's Delaware litigation practice."
Just weeks after those meetings, the governor urged state lawmakers to swiftly pass S.B. 21. The Lever's Luke Goldstein wrote Wednesday that "the timing of the emails obtained by CNBC reveals clear motivations driving the current law which was rushed before the Legislature last month by the new governor: to let top executives off the hook for legal liabilities."
In earlier reporting, Goldstein highlighted that "Delaware, which has long been perceived as a billionaire playground and corporate tax haven, is the incorporation home to more than 60% of all Fortune 500 companies. That means, if enacted, the wide-ranging regulatory handouts in the bill will have sweeping consequences for corporate behavior across the country."
The Lever's founder, David Sirota, on Wednesday lamented the limited attention the Delaware law is receiving, compared with a major national security breach involving several top Trump officials' unsecure group chat about war plans. As he put it, "Cannot overstate how significant this is—while the national media is focused on the D.C. drama, a group of Democrats off the radar in a tiny state just radically shifted more power to the planet's largest corporations via world-changing legislation."
Daniel Hanley, senior legal analyst at the Open Markets Institute, said Wednesday that "the Delaware lawmakers that enacted S.B. 21 are lapdogs for corporations and Musk. How this one state came to control practically all of American corporate law is a long story, but regardless, Congress can and should take the power away."
