Billionaire hedge fund manager Bill Ackman is joining a growing list of high-profile CEOs leaving Delaware, as his company Pershing Square Capital Management reincorporates in Nevada. This trend among public companies seeking more favorable treatment under other state laws has sparked concerns over recent court rulings empowering shareholders to challenge executive decisions.
Bill Ackman, CEO of Pershing Square Capital Management, has announced that his management company will be moving out of Delaware and reincorporating in Nevada. This decision comes on the heels of similar announcements from companies like ‘DropBox‘ and ‘SpaceX‘.
Bill Ackman is a prominent American investor, hedge fund manager, and corporate activist.
He founded Pershing Square Capital Management in 2004, which manages over $20 billion in assets.
Ackman is known for his activist investing approach, often taking large stakes in companies to push for changes in strategy or management.
He has successfully led campaigns at companies like McDonald's, Target, and Herbalife.
Ackman has also been involved in high-profile battles with corporate leaders, including a public feud with Valeant Pharmaceuticals' CEO.
His investment philosophy focuses on long-term value creation through strategic activism.
Ackman’s announcement was made in response to news that ‘DropBox’ is also making a move away from Delaware. He stated that Pershing Square Capital Management is reincorporating its management company in Nevada ‘for the same reason’ as DropBox, citing recommendations from top law firms that favor Nevada and Texas over Delaware.
This development follows a trend of high-profile public companies announcing their exit from Delaware, a state that has historically been considered business-friendly. Tesla CEO Elon Musk had previously encouraged companies incorporated in Delaware to leave after a judge repeatedly struck down his $55 billion compensation package, which was argued by shareholders to be excessive. As a result, Musk moved ‘SpaceX’ to Texas.
Much of the concern for these established public companies is a series of recent Delaware court rulings that have further empowered shareholders to challenge executive decisions. ‘Meta’, led by CEO Mark Zuckerberg, is also considering leaving Delaware and reincorporating in Texas or another state, according to The Wall Street Journal.
Mark Zuckerberg is an American technology entrepreneur and philanthropist.
Born on May 14, 1984, in White Plains, New York, he co-founded Facebook at Harvard University in 2004.
The social media platform quickly gained popularity, and by 2012, Facebook had over 1 billion users.
Zuckerberg's net worth is estimated to be over $120 billion, making him one of the richest people in the world.
He has also been involved in various philanthropic efforts through the Chan Zuckerberg Initiative.
Billionaire CEOs like Ackman, Zuckerberg, and Musk hope that courts in other states, such as Texas or Nevada, will be less permissive of lawsuits from shareholders and boards of directors. By moving their companies out of Delaware, they may find more favorable treatment under the laws of other states.
According to Forbes, in 2022, over 600 billionaires worldwide hold CEO positions.
This trend is driven by the increasing wealth gap and the rise of private equity firms.
Many billionaire CEOs have built their fortunes through aggressive deal-making and leveraging debt.
Notable examples include Elon Musk's 'Tesla' and 'SpaceX', and Jeff Bezos' 'Amazon'.
However, concerns arise regarding accountability and governance in companies controlled by individual billionaires.
Why Are Companies Leaving Delaware?
The move away from Delaware is largely driven by concerns over recent court rulings that have given more power to shareholders to challenge executive decisions. This has led some CEOs to seek more business-friendly environments in other states.
Other Companies Considering a Move Out of Delaware
‘Meta’, the parent company of ‘Facebook’ and ‘Instagram’, is reportedly considering leaving Delaware and reincorporating in Texas or another state. While Meta has not confirmed these plans, the move would be a significant shift for the company, which currently maintains a corporate structure that gives CEO Mark Zuckerberg near total control.
A Trend Among High-Profile Companies
The decision by Ackman and other high-profile CEOs to leave Delaware is part of a larger trend among public companies seeking more favorable treatment under the laws of other states. As the business landscape continues to evolve, it will be interesting to see how these moves affect the way companies operate and make decisions in the future.
