What The Hell America!

Delaware just passed a law this week that would shield tech billionaires Mark Zuckerberg and Elon Musk from an array of potential misconduct, which could impact active litigation against them alleging theft from shareholders. The bill was crafted by Democratic governor Matt Meyer’s office in direct consultation from Meta’s own legal team and a roster of corporate defense lawyers representing both billionaires, according to documents released last week by CNBC.

Those outside lawyers consulted by the governor include an attorney at a firm that recently represented Meta in a Delaware court and Leon Strine, a former Delaware Supreme Court justice who now works at a major defense side law firm, Wachtell Lipton. The firm is currently defending Mark Zuckerberg against an ongoing shareholder lawsuit over an improper settlement Meta struck in 2019 regarding the Cambridge Analytica data breach.

Separate from that court case, Meta is currently being investigated for potential wrongdoing by shareholders who recently filed multiple “books and records” requests to obtain company documents. Changes in the new law would shut off legal avenues for any evidence in those documents to lead to lawsuits that could be worth billions of dollars in violations.

The bill makes it easier for companies to deny disclosure requests and hand over fewer internal documents. Additionally, the criteria for an improper transaction that may be reviewed by a Delaware court will be much more lenient to corporate executives. As long as a majority of so-called independent directors approve a deal, without shareholder input, executives won’t be subject to liability for potential conflicts of interest.

The timing of the emails obtained by CNBC reveals clear motivations driving the current law, which was rushed before the legislature last month by the new governor: to let top executives off the hook for legal liabilities. Much of the coverage of the proposed law has focused on Elon Musk’s outsize involvement and the provisions that could reinstate his 2018 pay package currently held up in court. Musk’s lawyers did after all help draft the bill language along with Zuckerberg’s. But the new documents shed light on the lesser-known role that Meta’s CEO played in the shadows of this political drama directly impacting his own legal troubles.

The governor’s meeting invitation was emailed to Meta’s lawyers two days after news broke that Meta was considering leaving the state of Delaware. Parroting Musk, who moved Neuralink’s incorporation to Nevada last year, Meta cited dissatisfaction with Delaware’s court system and corporate governance laws, which it perceives as overly friendly to shareholder lawsuits. Before the governor’s office met with Meta, staff convened with defense lawyers on a conference call with the subject line “Discussion re: Corporate Franchise,” a direct reference to the purported problem this bill is supposed to solve.