ExxonMobil announced Tuesday that its board seeks shareholder approval to change the company’s legal permanent home to Texas from New Jersey.
Jeff Taylor is ExxonMobil’s general counsel; Gibson Dunn advised the company with a team led by Houston partners Gerry Spedale, Hillary Holmes and Tull Florey, as well as Washington, D.C., partner Ronald Mueller.
The board of the oil giant — which moved its headquarters to Irving in 1989 and again to the Houston suburb of Spring in 2023 — said the decision to redomicile in Texas is due to the legal and regulatory environment, “including its modernized business statutes and the Texas Business Court, which is designed to resolve complex disputes efficiently.”
ExxonMobil Chairman and CEO Darren Woods said Texas has “made a noticeable effort to embrace the business community,” over the past several years.
“In doing so, it has created a policy and regulatory environment that can allow the company to maximize shareholder value,” Woods said. “Aligning our legal home with our operating home, in a state that understands our business and has a stake in the company’s success, is important.”
The company pointed to the new Texas Business Court’s statute-based standards that “support sound decision-making,” as a factor in the move.
“In the past, a company like ExxonMobil looking to reincorporate would have automatically chosen Delaware, with little consideration of other jurisdictions,” University of Arkansas Law Professor Robert Anderson told The Lawbook. “That has now changed.”
“Delaware has long been the jurisdiction of choice for the majority of large companies because it was viewed as providing predictability and certainty for transactional planners. In the last few years, a few judges in the Court of Chancery have decided cases in ways that surprised corporate practitioners,” according to Anderson. “This has led to two legislative enactments in the last two years reversing many aspects of these decisions.”
Anderson said Nevada and Texas have revamped their corporate laws with a statutory approach to fiduciary duties.
“This has proven attractive to companies who are growing weary of the seeming unpredictability of the court-based approach in Delaware,” Anderson said in an email to The Lawbook. “The Nevada companies are mostly companies with controlling shareholders who are dissatisfied with the Delaware approach to controlling shareholder liability. Texas appears to be attracting a broader swath of companies looking to incorporate closer to their business hubs.”
Jackson Walker Dallas partner Byron Egan said things have simply changed in Delaware and many companies don’t believe they can get a fair shake in the Chancery Court. He also mentioned some long-time judges in Delaware no longer sit on the bench, including Myron Steele, who was Chief Justice of the Delaware Supreme Court from 2004-2014.
“It’s a strategic decision on Exxon’s part — just like Tesla and others — as the companies are looking at Texas as a great place to do business, and Delaware is not. They’re paying more in taxes and more fees in Delaware and they realize Texas is a better place for any potential food fight that may occur” Egan said.
Egan said a company the size of Exxon is privy to lawsuits as both plaintiff and defendant, and the level of contingent fees available to plaintiff’s lawyers in Delaware have reached $500 million. He said companies might look at that figure and see little to no shareholder value in pursuing a specific case in that court. Hence, the move to Texas.
The Gibson Dunn team that advised ExxonMobil also includes of counsel Robbie Hopkins and Patrick Cowherd and associate Muriel Hague in Houston and associate Maggie Valachovic in D.C.
Houston partners Gregg Costa, Collin Cox and David Woodcock (Dallas/Washington, D.C.) and Colin Davis (Orange County) advised on litigation aspects. Partner Pamela Lawrence Endreny in New York, senior counsel Gregory Nelson and associate Abram Dorrough in Houston advised on tax aspects.
Dallas partner Krista Hanvey and of counsel John Curran in New York provided counsel on benefits. Partners Brian Lane and Thomas Kim in Washington, D.C., advised on securities aspects while partner Shalla Prichard and associate Iris Hill Crabtree advised on financing aspects from Houston.