The trilogy of Delaware court decisions involving Elon Musk’s 2018 Tesla pay package, as well as other recent Delaware court decisions, has led more public companies than ever to consider reincorporating from Delaware to states like Florida, Indiana, Nevada, and Texas, where the duties of directors are more clearly defined by statute and the prospect of personal liability for directors is more remote. According to proxy advisor Glass Lewis, more public companies reincorporated out of Delaware in 2025 than in prior years. At the same time, the fear of a “DEXIT” appears to be overblown.

More public companies are incorporated in Delaware than any other state — and by a large margin. More than 50% of U.S. public companies are Delaware corporations, including more than two-thirds of Fortune 500 companies. Delaware’s specialized business courts and well-developed body of corporate law have given it the well-deserved reputation as the default state in which to incorporate. At the same time, as Tesla and other companies have learned, much of Delaware’s corporate law is based on the decisions of courts acting in equity — often determining whether a particular action is “fair.” That subjective determination can lead individual judges to find fault with board decisions despite the board’s best efforts to comply with the law. In the Tesla case, the Delaware Supreme Court ultimately reinstated Musk’s pay package, and while the court only awarded the plaintiff $1 in damages, the court still awarded an estimated $55 million in attorneys’ fees to the plaintiff’s counsel.

Other states like Florida, Indiana, Nevada, and Texas have corporate laws where the duties of directors are expressly written into the statute, courts have less discretion to overturn board decisions, and personal liability for individual directors requires some level of reckless or intentional wrongdoing on their part. They also have lower franchise taxes and, in some cases, have been aggressively marketing themselves as an alternative to Delaware.

As for DEXIT, in the Glass Lewis analysis, only 29 public companies formally proposed reincorporation to their shareholders (and only 18 such companies proposed reincorporation from Delaware), with all but two of the proposals being approved by shareholders. That’s less than 1% of all U.S. public companies that proposed reincorporation, and an even smaller amount that proposed reincorporation from Delaware. While DEXIT may be overblown, a robust discussion of the pros and cons of reincorporating to another state is a healthy one for all public companies to consider. Corporate laws often differ in very material ways, and two different companies may legitimately reach two very different conclusions on which state of incorporation is best for them.