Fidelity National Financial Inc.’s relocation from California in 2003 was a coup for Jacksonville, bringing a Fortune 500 headquarters office to the city.
However, a decade after Fidelity Chairman Bill Foley moved to Las Vegas to run his National Hockey League team, Las Vegas is becoming the center of much of the title insurance company’s activities.
Not only is the company conducting a lot of its business in Las Vegas, it is seeking to incorporate in Nevada.
At the company’s upcoming annual meeting, Fidelity is asking shareholders to approve a redomestication of the company from Delaware to Nevada.
Fidelity’s headquarters office remains in Jacksonville, and that won’t change if its incorporation moves to Nevada.
Delaware has long been the legal state of incorporation for many businesses that are headquartered elsewhere, because of a perceived favorable legal climate.
However, some recent unfavorable court rulings for corporations – highlighted by a Delaware judge’s ruling that rescinded Tesla CEO Elon Musk’s compensation package – have prompted Tesla and some other business to move their incorporation to other states.
It’s a phenomenon that is being referred to as “Dexit.”
“The Board believes that in recent years there has been an increased risk of opportunistic litigation for Delaware public companies, which has made Delaware a less attractive place of incorporation due to the substantial costs associated with defending against such suits,” Fidelity said in its proxy statement for its annual meeting.
The proxy said the redomestication will have no impact on its business, and that the headquarters will remain in Jacksonville.
Peter Sadowski, Fidelity’s chief legal officer, said in a telephone interview the company is not considering moving the headquarters office.
“No, not at all,” he said.
“Our headquarters is and will remain in Jacksonville.”
However, in outlining its reasons for moving the incorporation to Nevada, Fidelity’s proxy explains that more of its business is being conducted in that state.
“We have significant operations in our West Region, which has become the more active and dominant region for the Company in recent years,” it said.
“Approximately 60% of our employees report to our Western Operations located in Las Vegas,” it said.
“The number of direct title open orders is almost double those in the East Region. Las Vegas, Nevada, is also the principal office for several members of our senior management.”
Foley is not one of the executive officers in senior management but he is one of three members of the board of directors who reside in Las Vegas.
“Approximately three out of every four meetings of our Board have taken place in Las Vegas,” the proxy said.
“Nevada has also become the primary venue for our major corporate events, including managers’ meetings, budget meetings and strategy meetings.”
The company had 6,050 employees in its West Region, including 582 in Nevada, and 3,809 in the East Region, the proxy said.
Sadowski said Fidelity has 768 employees in Northeast Florida, including 614 in Duval County.
Fidelity owns its headquarters building at 601 Riverside Ave.
Fidelity’s proxy said the company has other reasons to move its incorporation to Nevada, besides its operations.
“We believe that the recent variety in and unpredictability of judicial interpretation in the Delaware courts will have a chilling effect on corporate decision making, which could result in a company not engaging in transactions potentially beneficial to stockholders. Nevada courts follow a more statute-based approach to director and officer duties that is less dependent on the vagaries of judicial interpretation in the Delaware courts.”
Fidelity also said it will receive financial benefits by moving to Nevada. It paid $250,000 in Delaware franchise taxes last year, but it expects to pay a total of $900 in annual fees to Nevada if it relocates.
Fidelity had a redomestication proposal at its annual meeting in 2024 but it was narrowly defeated.
The company said it has had discussions with certain stockholders to hear their concerns about the proposal and expressed confidence it has addressed those issues.
Fidelity’s annual meeting will be held virtually June 11.