Delaware’s corporate law grants officers and directors broad discretion, subject to one condition: Get the process right.  Want to pay the CEO millions of dollars?  Go ahead—just be sure you have a compensation committee empowered to negotiate the pay package with the assistance of compensation consultants.[1]  Want to sell the corporation in a leveraged buyout?  No problem—just be sure you review all the documents and deliberate on the fundamental value of the corporation and not just the financing needs of the buyer.[2]  What if you are a controlling shareholder and you want to cash out the minority,[3] maintain control over the board,[4] or move out of Delaware?[5]  Feel free—just be sure you use the right corporate documents,[6] or set up an independent committee of the board and get it approved by the shareholders,[7]or just move when there’s no pending or potential litigation.  You’ll be on your way to Nevada in no time.[8]  What if you don’t get the process right?  And what if that’s because you are an entrepreneur who likes to move fast and break things?

In a recent article, I observe that recent decisions in Delaware’s Court of Chancery and Supreme Court reveal a palpable judicial discomfort with entrepreneurial corporate governance.  This is primarily because entrepreneurs, and the governance norms they operate under, tend to eschew managerial process in favor of quick and decisive action.  In other words, entrepreneurial corporate governance does not look like the model of deliberation and process constructed through years of careful judicial development in the nation’s premier corporate jurisdiction.

This has put major pressure on Delaware courts as they have confronted aggressive entrepreneurs in recent blockbuster decisions including Tornetta v. Musk,[9] Palkon v. Maffei,[10] In re Match Group Derivative Litigation,[11] and West Palm Beach Firefighters’ Pension Fund v. Moelis.[12]  I argue that these cases, among others, reflect judicial inhospitality to entrepreneurial corporate governance in favor of more traditional corporate governance norms I call “process managerialism.”  Finally, notwithstanding recent aggressive legislative interventions,[13] I propose a synthesis where Delaware courts can let go of that inhospitality while maintaining the important values at the heart of Delaware’s process-oriented doctrine.

Insistence on Process and Inhospitality to Entrepreneurs

Delaware corporate law is enabling in the sense that it contains numerous judicially and legislatively validated processes for carrying out business decisions that will insulate the decisionmakers from judicial second-guessing.  The business judgment rule, for example, evaluates whether directors created a record of the decision process that reveals meaningful deliberation and shows that the directors are free from conflicts of interest, thus presumptively fulfilling their duties of care and loyalty, respectively.  Even in the most sensitive conflicts—those between a controlling shareholder and the minority—Delaware courts developed a framework for “cleansing” the transaction of the controller’s conflict through an independent board committee and a fully-informed shareholder vote.[14]

Over time, each of these simple-sounding processes grew more complex, especially as to the duty of loyalty.  For example, a conflict of interest need not be only a material, financial interest, but could simply be too much personal loyalty to another director who might have such an interest.  The application of this notion of independence to each director at every stage became an all-encompassing, open-ended question.  A failure of independence, then, means a failure of process, and full judicial airing of the business decision.  Delaware law shifted, imperceptibly, from the above framing (managers can do anything as long as they follow the process) to a new one: Managers can’t do anything without getting every detail of a long process perfect.

As this shift was accelerating, Silicon Valley-style move-fast-and-break-things entrepreneurialism was having a moment.  The two collided in 2024 and 2025, with the Musk, Moelis, Maffei, and Match Group decisions.  Delaware chancellors invalidated Elon Musk’s pay package, invalidated Ken Moelis’ self-empowering shareholder agreement, and preserved potential financial liability for Greg Maffei’s move to Nevada. Meanwhile, the Delaware Supreme Court held Match Group’s board ineligible for business judgment-rule protection for a spin-off transaction due to one person (on a unanimous three-person committee) later being found to have lacked independence from the controlling shareholder.  In each case, Delaware courts chastised managers for their insufficient adherence to various processes.  Entrepreneurs, who move quickly and decisively, were simply executing under corporate governance norms that facilitate that kind of decision-making.  Unfortunately, these norms are uncomfortably at odds with Delaware’s doctrines.

Room for Entrepreneurs?

Unequivocally, Delaware’s processes protect important values in corporate law: managerial accountability, fairness in the distribution of corporate largesse, and, put simply, assurance that  the minority shareholders get what they bargained for when they invested.  Judicial review of boards’ decision processes is a good middle way between substantive judicial review and no judicial review for ensuring the above values are vindicated.  If the court can discern that the board followed a good process, it indirectly vindicates the shareholders’ interests while placing less of a burden on the board to justify the substance of the decision.  The balancing act breaks down if the courts too strongly perceive a lack of process as a reason to be skeptical about the substance.  When entrepreneurial managers act decisively instead of deliberatively, the court could always review the decision substantively and conclude the directors are not liable—indeed, Delaware courts have done so and ruled in favor of the directors before.[15]  But, too often in recent years, the perceived inattention to process has driven the substantive analysis to fail, too.

There is a way to restore the balance.  I propose that Delaware courts grant entrepreneurial firms and their management more flexibility in the absence of true signs of shareholder harm such as fraud, appropriation of minority shareholder investment, and opportunism.  For example, simply being unable to find an “independent enough” director does not automatically result in shareholder harm.  A highly paid entrepreneurial executive does not equate to a misappropriation of value from the shareholders to the executive.  And not every fast and decisive corporate action is opportunistic.  Indeed, sometimes shareholders in entrepreneurial corporations invest because they want decisive, bold, and even risk-taking entrepreneurial management.  Recognizing the value of the entrepreneurial approach in some corporations, as opposed to a one-size-fits-all process-managerialist one, can restore the balance that made Delaware law the envy of the corporate world.

ENDNOTES

[1] In re Walt Disney Co. Deriv. Litig., 906 A.2d 27 (Del. 2006).

[2] Smith v. Van Gorkom, 488 A.2d 858 (Del. 1986).

[3] Kahn v. M&F Worldwide, Corp., 88 A.3d 635 (Del. 2014).

[4] West Palm Beach Firefighters’ Pension Fund v. Moelis & Co., 311 A.3d 809 (Del. Ch. 2024).

[5] Maffei v. Palkon, 339 A.3d 705 (Del. 2025).

[6] Moelis, 311 A.3d at 822.

[7] Kahn, 88 A.3d at 635.

[8] Maffei, 339 A.3d at 705.

[9] 310 A.3d 430 (Del. Ch. 2024); 326 A.3d 1203 (Del. Ch. 2024); rev’d In re Tesla Motors Deriv. Litig., 351 A.3d 1005 (Del. Dec. 19, 2025).

[10] 311 A.3d 255 (Del. Ch. 2025), rev’d Maffei, 339 A.3d 709.

[11] 315 A.3d 446 (Del. 2024)

[12] Moelis, 311 A.3d at 809.

[13] S.B. 313, 152nd Gen. Assemb., Reg. Sess. (Del. 2024); S.B. 21, 153rd Gen. Assemb., Reg. Sess. (Del. 2025)

[14] Kahn, 88 A.3d at 635.

[15] See, e.g., In re Trados Corp. Shareholder Litig, 73 A.3d 17 (Del. Ch. 2023) (Laster, J.).

Martin Edwards is an assistant professor at the University of Mississippi School of Law. This post is based on his recent article, “Entrepreneurialism, Process Managerialism, and the Trajectory of Delaware Law,” available here.