Hey, North Dakota. I Told You So.

Last year, I wrote a very short essay entitled Why the North Dakota Publicly Traded Corporations Act Will Fail:

North Dakota hopes that the Act will empower it to compete with Delaware in the market for corporate charters. In my view, North Dakota is doomed to failure. If state chartering competition is a race to the bottom, managers will prefer Delaware to North Dakota because the former facilitates the extraction of private rents. If state competition is a race to the top, investors will prefer the director primacy approach taken by Delaware to the shareholder primacy one adopted by North Dakota. Either way, North Dakota loses.

It turns out that it's a race to the top (or, at least, that's how I chose to interpret the result reported by the Business Law prof blog)

:

The Northrop Grumman Corporation filed its Form 8-K yesterday and reported:

The shareholder proposal to reincorporate the Company from Delaware to North Dakota under the new North Dakota Publicly Traded Corporations Act was not approved with a vote of 226,210,028 shares against, 13,350,892 shares for, and 1,974,740 abstentions.

This is not really shocking, as all the corporations--except American Railcar, which boasts Carl Icahn as majority shareholder--that have considered such a move have rejected the proposal.

In any case, the North Dakota Act's been a massive flop. I told you so.