Friends,
East Coast? West Coast? Nope. Gulf Coast.
While Texans prepare to cast their ballots in the May primary runoff elections, another consequential vote will take place the next day. ExxonMobil’s shareholders will vote on May 27 to approve or deny the board’s recommendation to reincorporate from New Jersey to Texas.
Exxon’s vote on May 27 isn’t the first of its kind and won’t be the last. Major public companies have already approved reincorporation in Texas: Public Storage, Oracle, Hewlett Packard Enterprises, SpaceX and Tesla. Dell shareholders will consider a similar proposal in June; Dell is seeking to move from Delaware to Texas.
Meanwhile, the pushback from the Northeast has gotten significantly louder since the Exxon announcement. That’s because the movement to reincorporate has real financial consequences for states such as Delaware that depend on the franchise tax revenue and economic activity associated with a corporate governance-driven economy.
The “DEXIT” movement is real, driven by an activist Delaware chancery court that is negatively impacting corporations domiciled there. Multiple states are moving to capitalize on Delaware’s missteps. Nevada has successfully welcomed more reincorporations than Texas – so far. Florida has become the new home for executives (Texas is close behind) looking to flee the rising taxes and falling services in California and New York.
But, Texas has done something the others have not been able to achieve: aligning corporate filings and physical headquarters in the same state.
The economic benefits from a business choosing to reincorporate in Texas are substantial. Being the site of business incorporations ramps up white collar specialties, such as financial services and legal work. The benefits for physically relocating a headquarters to Texas are significantly larger, with short-term gains from construction and buildout and long-term gains that are developed through permanent job creation and surrounding economic activity. This whole effort injects prosperity into the communities where these companies relocate.
Companies that choose to both reincorporate and headquarter in Texas will see greater access to a fair and efficient legal system, capital expansion, job creation, and other positive economic effects. Economic mobility also expands as a new generation of Texans gains opportunities to live, work, and raise a family in their home state by securing a fast-growth, high-wage job in a competitive industry.
All of this has been made possible by recent policy changes by lawmakers and state leaders, coupled with Texas’ longstanding role as a leader for economic development. This is what a new generation of Texas Miracle looks like — putting the American Dream back in reach for the very people who make it all possible.
For the future of Texas,
Ryan Patrick
CEO | TLR
