Let's forget about the first state and call it the “worst state”.
A CEO launched a $2 million bid Monday to tarnish Delaware's boring reputation and encourage U.S. companies to stop registering in the state despite its business-friendly tax and court system.
Philip Shaw is spending millions on national attack ads after a harrowing legal battle that has made him a mortal enemy of the state best known as Joe Biden's home turf.
He's not the only enemy. Elon Musk also slammed Delaware, especially the courts, after losing his own legal battle over a planned $56 billion in compensation from Tesla, which is bad for companies registered in the state. he claimed.
“As CEO of Tesla, Elon created unprecedented value for shareholders and earned that compensation over the years pursuant to a contract he signed with the board,” Shaw told the Post. . “This sets a terrible precedent for CEOs and businesses across the country.”
In an ad aired nationally on CNBC and Bloomberg, Shaw, CEO of translation giant TransPerfect, blasted what he called “greedy” attorneys in Delaware, and the company's most senior executives. He names one of the judges. The ads are running on local television stations in Delaware and on Hulu accounts.
Shaw's campaign comes after his business was seized and auctioned by the state of Delaware. The suit was filed in court after his co-founder and now ex-wife filed suit in the state where it was incorporated.
He sacrificed another four years of legal battles and an estimated $260 million in legal fees to be able to buy the company back as sole owner for $385 million. He is still in a dispute with the state over his attorney fees.
Mr. Shaw's ad highlights Mr. Musk's lawsuit. In this case, a Delaware court upheld a Tesla shareholder lawsuit that argued that the CEO's cash and stock compensation package did not benefit all of the company's shareholders.
In Delaware, lawyers typically receive a 10% to 20% cut of the amount they “recover” to shareholders, and the lawyers who brought the Tesla lawsuit could be paid up to $6 billion in salaries. However, Shaw says this equates to an hourly wage of $300,000 per shareholder. they.
“The only thing I can think of that would be more unreasonable and unpredictable in corporate law than a court invalidating a legally binding contract for executive compensation that has been approved by both the board of directors and shareholders. That same court would turn around and pay attorneys based on a percentage of the value of the voided contract,” Shaw told the Post.
His ad attacked Kathleen McCormick, the judge who presided over Musk's case and parts of it, claiming she was allowing a rampant proliferation of “fat cat” lawyers. Mr. McCormick is the Chief Justice of the Delaware Court of Chancery and the most senior judge in the Commercial Court.
Delaware has historically been a state where businesses incorporate, or legally register, in part because of its system of en banc courts dedicated solely to adjudicating corporate disputes. Corporations registered there but not doing business in the state pay no corporate income taxes, and officers and directors affiliated with the corporation are not required to disclose their names.
More than 1.4 million companies are registered in Delaware, including more than half of the Fortune 500 companies. However, calls for the state to “leave'' have grown in the wake of the Musk ruling, with Delaware arguing that it is anti-business.
Musk earlier this year Posted on X“Never set up a company in Delaware.'' He said there are plans to move X, Neuralink and SpaceX out of state.
Shaw organized the campaign through Citizens for Judicial Fairness (formerly known as Citizens for a Pro-Business Delaware), a nonprofit he founded in 2016 during a legal battle with the state of Delaware. We are supporting the development of
The group says it is focused on transparency, fairness and accountability, and even brought in the Rev. Al Sharpton to slam the court's lack of diversity.
The Post has reached out to McCormick for comment.