Gurley warns highest-profile companies face greatest risk from activist Delaware judges, not smaller market cap firms.
“I think it's actually the highest profile companies that are at risk because they're the ones that, you know, an activist judge is gonna wanna make a a exception out of.”
Gurley cites research showing Delaware awards attorney fee multiples 23x to 57x more frequently than federal courts.
“in Delaware, seven times or higher is 23 times more likely than in a federal court. And 10 times or higher is 57 times or higher than in a federal court.”
Gurley reveals 55% of high-multiplier Delaware cases are assigned to just two judges including the chancellor who assigns cases.
“It turns out that in the 20 cases where you have this this super high multiplier, 55% of the cases are just two of the judges.”
Gurley argues every Delaware company should move domicile to avoid derivative lawsuit risk from staying.
“I would make the argument that every company in Delaware has to move to a different domicile because they could be sued in a future derivative lawsuit for the risk they've taken by staying”
Gurley says lawyers in Delaware derivative suit against Tesla are asking for five to six billion dollars in payment.
“One one data point you you left out, which came up recently, is the lawyers that that pursued this case are asking for 5 or $6,000,000,000 in payment.”
Gurley questions how a plaintiff with only nine shares can justify multibillion-dollar lawyer fees in Delaware case.
“So how could how could a client with nine shares lead to a multibillion dollar award to a lawyer?”
Gurley says he would offer Musk's compensation package to any CEO and would buy stock in companies using similar structures.
“I would also say if any other CEO took a package like this, I would in a public company, I would be very encouraged to consider buying a lot of it.”