Delaware’s Corporate Makeover is More Than Just Legal Tweaks - It’s a Redefining Moment
By Arthur Kohn, Skytop Contributor / August 12, 2025
Arthur Kohn has practiced law since 1986, focusing on compensation and benefits matters, including executive compensation, pension compliance and investment, employment law, corporate governance and related matters. In 2012, he was named by the National Association of Corporate Directors’ Directorship magazine to the Directorship 100 list, which seeks to identify “the most influential people in the boardroom community, including directors, corporate governance experts, journalists, regulators, academics and counselors.” In 2021, he was appointed as a fellow to the American College of Governance Counselors.
Arthur is an adjunct professor at New York University School of Law, which he has taught the Taxation of Executive Compensation since 2009. He frequently speaks and writes about executive compensation, taxation and corporate governance matters. He repeatedly has been recognized for his work by the business and legal press, including Best Lawyers, Chambers USA, The Legal 500, Super Lawyers of New York and others.
Arthur received a B.A. from Columbia University and a J.D. from Columbia Law School, where he was admitted into the Accelerated Interdisciplinary Legal Education program, was appointed a Harlan Fiske Stone Scholar and received Phi Beta Kappa honors.
Delaware updated its corporate law in both 2024 and 2025, ostensibly to restore balance between market expectations and judicial interpretations. Yet, these updates signal far more than routine modernization. They reflect a broader reckoning in how companies, boards, and courts grapple with power, risk, and control in today’s digitized corporate environment.
Delaware has long been corporate America’s quiet custodian—predictable, efficient, and comfortably behind the curtain. But something changed. The recent amendments to its corporate code marked a tectonic shift, challenging bedrock assumptions about governance and prompting a range of reactions from boardrooms and shareholders alike.
From Board Dominance to Shareholder Input
At first glance, the changes may seem incremental. Boards gained greater latitude to offer shareholders veto rights on certain board actions, and merger mechanics—like reverse termination fees (RTFs)—received updated treatment to reinforce confidence in deal-making.
As Davis Polk & Wardwell LLP observed in their July 2024 client advisory, “Reverse termination fees have become critical tools for allocating deal risk; their enforceability under Delaware law preserves confidence in transactional predictability.” These provisions are particularly vital in private equity deals, where complex financing structures rely on well-calibrated exit clauses. The reforms show Delaware’s willingness to adapt, but also hint at deeper tensions over authority and oversight.
A Shift in Tone—and Temperature
Delaware’s reform process has traditionally been discreet, shaped quietly by practitioners and jurists. But the 2024–2025 cycle unfolded with public friction: interviews, legal op-eds, and even billboards. Concerns over legal uncertainty began surfacing in boardrooms, prompting some companies to explore alternative incorporation states like Nevada, Texas, and Florida.
As Darla Stuckey, President of the Society for Corporate Governance, warned in Corporate Counsel in April 2025, “Certainty is the currency of business decision-making. When legal standards fluctuate, companies start reevaluating where they feel safest.” Her remarks mirrored the actions of TransPerfect CEO Phil Shawe, who launched public campaigns attacking the Delaware judiciary before reincorporating in Nevada. These weren’t just isolated responses—they were strategic maneuvers hinting at fading confidence.
Redefining Corporate Control
The 2025 amendments further deepened the conversation, focusing on controlling stockholders and conflicts of interest. Delaware’s invalidation of Elon Musk’s Tesla compensation package made international headlines, culminating in the company’s reincorporation in Texas. TransPerfect’s move followed a similar trajectory but included a more public media offensive—marking a striking departure from corporate diplomacy.
This upheaval sparked debate over judicial overreach. In Delaware Corporate Law Myth-Busting (2025), Potts, Blumberg & James defended the judiciary: “The decisions represent a conservative and common-sense application of longstanding equitable principles... That makes for both good law and good policy.”
Yet others disagree. Professor Stephen Bainbridge, in his article A Course Correction for Controlling Shareholder Transactions (February 2025), contended that “Delaware courts increasingly exhibit a reflexive suspicion of transactions involving a controlling shareholder.” He cited recent rulings such as United Food v. Zuckerberg and the application of the MFW framework as examples of an evolving, and arguably stricter, standard of review.
Business Judgment Rule: Reaffirmation or Retreat?
Another layer of controversy emerged in Maffei v. Palkon, which reaffirmed the board’s authority to choose the company’s state of incorporation, reinforcing the business judgment rule. Critics claimed this invites strategic forum-shopping; advocates hailed it as a validation of board autonomy.
Former Chancellor William B. Chandler III summed up the philosophical divide when he paraphrased rulings from Unocal and Airgas: “The board’s authority is not a courtesy extended by shareholders, but a legal and structural necessity—a buffer against short-termism and a steward of continuity.”
The Rise of Unorthodox Lobbying
Adding further complexity, this round of reform wasn’t accompanied by quiet persuasion—it was driven by spectacle. Elon Musk’s tweets and TransPerfect’s billboard blitz were emblematic of a new playbook, blending litigation strategy with media influence and political theatre.
Political scientist Lee Drutman warned of this shift in The Business of America Is Lobbying (2015): “Once firms develop the strategic asset of political engagement, they are likely to want to continue because they view it as integral to their market positioning.” Delaware, once an apolitical legal haven, now finds itself in a reputational tug-of-war.
So, Does It Matter?
Yes—and not just for Delaware.
Legal predictability is the infrastructure of global investment. Whether one views these changes as a course correction or a consolidation of power, they reflect a new willingness among corporate actors to directly shape the frameworks that govern them. This is no longer just a story of reform; it’s a referendum on how corporate governance will evolve in an age of decentralization, digitization, and disruption.
As Margaret Tahyar aptly stated during a 2023 panel for the Practising Law Institute, “Legal certainty is the silent infrastructure of innovation. When rules wobble, investment stalls.”
The takeaway? Delaware’s reforms aren’t simply technical—they’re symbolic. And corporate America is watching closely.