Delaware State News | March 19, 2025 | Opinion
by John D. Flaherty
Editor’s note: The following was recently sent to Rep. Krista Griffith, D-Fairfax, chair of the House of Representatives’ Judiciary Committee.
We are writing to urge you to vote no on Senate Bill 21.
According to published reports, SB 21 seeks to rewrite Delaware law in response to a disgruntled litigant, Elon Musk, who is lashing out at the state’s judiciary rulings against his attempted $56 billion pay grab.
If passed into law, SB 21 would allow CEOs to transfer massive value from public investors and pension funds into their own pockets.
According to the local advocacy group Stop the Billionaires’ Bill, the proposal seeks to overturn dozens of Delaware Supreme Court precedents and would allow powerful executives and controlling shareholders to operate with unchecked influence and near-total impunity, as well as without meaningful judicial oversight.
SB 21 would transfer billions in wealth from hardworking, everyday people to CEOs and billionaires by eliminating investor protections that ensure transparency and fairness.
The legislation would:
- Restrict investor access to critical internal corporate records, making it nearly impossible to investigate and uncover misconduct
- Shield CEOs, directors and controlling shareholders from accountability for acting in their own self-interest at the expense of their investors
- Overturn decades of law allowing investors to sue CEOs, directors and controllers for transferring value from pension funds and other investors into their own pockets
Supporters of SB 21 claim that its passage is needed to stop the more than 2 million companies incorporated in Delaware from leaving.
There is no credible evidence that companies are fleeing Delaware.
And, to that point, Charles Elson, renowned founding director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, said he thinks “investors would be reluctant to put money into Delaware companies if there were exceptions to the law for ‘special people’” (Tom Krisher, “A judge has once again rejected Musk’s multi-billion-dollar Tesla pay package. Now what?” The Associated Press).
Over the past year, more companies have moved to Delaware than have left.
Companies such as Tesla and Meta, which have left or are threatening to leave to put pressure on Delaware, are controlled by a single shareholder seeking to use his control to enrich himself at the expense of pensioners.
We should heed these observations by Mark Richardson, who represents shareholders in lawsuits: “What these companies want is for there to be no possibility for a shareholder or a court to review their conduct.” He added, “Catering to those extreme views to please a few corporations is a terrible mistake for Delaware that will destroy the franchise in the long run” (Liz Hoffman, “MAGA offers corporations cover to flee Delaware,” BusinessTech).
Rather than caving to fear-mongering, we urge the House of Representatives’ Judiciary Committee to vote no on SB 21.
Protect working Delawareans and pensioners, and uphold the fair and consistent legal standards that have made Delaware the nation’s top destination for incorporation.
John D. Flaherty is a director of the Delaware Coalition for Open Government.