A Delaware judge granted sexual assault claims against Sanford and other eXp board members, and just six weeks later, the company filed paperwork to establish an April vote on incorporating into Texas.
Weeks after a Delaware judge allowed a sexual assault lawsuit against eXp Realty executives to proceed, eXp World Holdings has filed paperwork to move its incorporation from Delaware to Texas.
In a Feb. 25 letter from CEO and founder Glenn Sanford to the Securities and Exchange Commission, Sanford said the company’s growth over the past year has raised “significant governance questions” and that the board is asking shareholders to vote on the move to Texas.
The CEO added, “We believe that Texas provides a clearer, more predictable and better governance environment for a company of our size and complexity. This is not a structural change to the way we operate. This is a thoughtful evolution of the framework in which we operate and is in the long-term interest of our shareholders, our agents and our business.”
Texas is working to persuade companies considering leaving Delaware by touting the state’s new business court and overall free-market reputation. Some companies are wary of doing business in the state because of its litigious state and reputation for paying close attention to corporate governance. Nevada is also emerging as an option for companies considering exiting Delaware.
Six weeks earlier, Delaware Court of Chancery Chief Justice Catherine St. J. McCormick had granted sexual assault allegations against Sanford and other eXp board members, according to McCormick’s Jan. 16 opinion.
Although no direct link has been established between this legal opinion and eXp’s SEC filing reported by Bloomberg Law, the timing of the two events may raise questions in some circles in the industry.
The lawsuit, first filed in 2024, details allegations that Sanford and other leaders at eXp tried to cover up the company’s “rape culture,” which culminated in 2020 with the sexual assault allegations against former eXp employees Michael Bjorkman and David Golden that made headlines.
EXp’s leaders “harmed the company by harassing, drugging, assaulting, and raping agents at company events,” the judge’s opinion said. “Some defendants benefited financially from hiring the perpetrators and actively covered up their conduct. Others did not respond in good faith to red flags that signaled a rape culture at their companies.”
An internal investigation that followed a whistleblower who reported the alleged assault was also fruitless because it was led by an insider within the company, the judge said. No meaningful action was taken by the company “until a survivor filed an anti-trafficking complaint against the company in 2023.”
Plaintiffs in the case also argued that because Bjorkman and Golden were Sanford’s “downline,” Sanford had a financial incentive to keep them with the company, meaning they would be compensated as sales increased.
In response to Inman’s request for comment, eXp World Holdings sent the following statement:
The Board of Directors of eXp World Holdings, Inc. believes that reincorporating in Texas is in the best interest of the Company and its stockholders and provides an appropriate governance framework for a company of eXp’s size and complexity. This decision was made after more than a year of significant consideration and consideration. The re-incorporation is not expected to result in any changes to the Company’s business, operations, operations, assets or liabilities. Extensive details regarding this offer are contained in the proxy statement filed with the SEC.
After a Delaware court rejected Elon Musk’s pay package with Tesla, the Tesla founder took to social media to warn others about doing business in the state.
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