Musk, Moelis, and Activision: Is Delaware’s Dominance At Risk?

Stability and predictability have long been the hallmarks of Delaware’s corporate framework and the driver of Delaware’s dominance as the domicile of choice for corporate America. But following a series of recent decisions from the Delaware Court of Chancery, including Tornetta v. Musk (invalidating option grant); West Palm Beach Firefighters v. Moelis & Co. (invalidating shareholder agreement under Section 141(a) of the DGCL) and Sjunde AP-Fonden v. Activision-Blizzard (declining to dismiss a challenge to the validity of a merger based on alleged failures in authorization under Section 251 of the DGCL), as well as a number of high-profile calls to consider re-incorporating outside of Delaware, a growing number of corporate commentators are questioning whether Delaware’s long-standing dominance is at risk. Are these cases outliers, or do they signal that the Delaware Court of Chancery has changed course? Are the cases actually surprising? Is the current Delaware “backlash” justified, or is it an overreaction fanned by a few outspoken critics?

The panelists included:

• Amy Simmerman, Partner at Wilson Sonsini
• Scott Kupor, Managing Partner, Andreessen Horowitz
• Joseph A. Grundfest, W.A. Franke Professor of Law and Business, Emeritus at Stanford University
• Gordy Davidson, Partner Emeritus at Fenwick

The panel was moderated by Cathy Dearlove, Partner at Richards Layton & Finger, P.A.

Reading Materials:

“Musk Moonshot Decision”

“Fee Brief Filed by Tesla”