Failed Deal Denies Core Scientific CLO Record-Setting Golden Parachute
On November 10, 2025, Law.com reported that Core Scientific Inc.’s Chief Legal Officer (CLO), Todd DuChene, has lost out on a staggering $43.8 million golden parachute payout—the largest ever proposed for a corporate legal chief—following the collapse of the company’s $9 billion all-stock merger with CoreWeave Inc. Shareholders rejected the deal on October 30, 2025, citing undervaluation and strategic misalignment, forcing Core Scientific to terminate the agreement and leaving DuChene’s windfall in limbo. This episode underscores the high stakes of M&A in the AI and crypto infrastructure sectors, where executive compensation packages can become flashpoints for investor activism.
The fallout highlights tensions between executive retention incentives and shareholder value, especially as Core Scientific pivots from Bitcoin mining to AI data centers amid surging demand. While the firm retains a $10 billion, 12-year hosting contract with CoreWeave, the failed merger has sparked questions about leadership stability and future deals.
Deal Background and Collapse
Core Scientific, a Nasdaq-listed (CORZ) digital infrastructure provider, announced the merger in July 2025 as a strategic union to bolster AI cloud capabilities. Valued at $16.40 per share, the all-stock transaction faced immediate pushback:
- Investor Opposition: Two Seas Capital, the largest active shareholder, launched a proxy campaign in September, arguing the deal “transfers significant value to CoreWeave” at an inadequate price, exposing holders to CoreWeave’s volatile stock without collars.
- Proxy Advisors Weigh In: Institutional Shareholder Services (ISS) and Glass Lewis recommended voting “against” in late October, praising Core Scientific’s standalone potential in AI infrastructure over the merger’s risks.
- Shareholder Vote: On October 30, the proposal failed to secure majority approval, prompting immediate termination. Core Scientific’s shares jumped 15% post-vote, reflecting market bets on independent growth.
The rejection aligns with broader AI “mania” skepticism, as investors prioritize unlocking value in high-growth assets like Core Scientific’s 1.3 GW power capacity.
The Golden Parachute at Stake
Golden parachutes—severance packages triggered by change-of-control events—are designed to retain talent during M&A turbulence. DuChene’s proposed payout, detailed in the merger proxy, would have shattered records:
- Breakdown: Approximately $30 million in accelerated equity vesting (restricted stock units and performance shares), $10 million in cash severance (3x base salary + bonus), plus benefits continuation and tax gross-ups.
- Context: As CLO since 2023, DuChene oversaw regulatory compliance during Core Scientific’s post-bankruptcy relisting and AI pivot. His package was part of broader executive perks, including similar deals for CEO Adam Sullivan (~$50M total).
- Record Potential: Prior top CLO parachutes hovered around $20-25 million (e.g., Oracle’s Dorian Daley in 2022). At $43.8M, DuChene’s would have topped even CEO-level awards in tech M&A.
Shareholders, including VanEck (2.2M shares), explicitly voted against the “golden-parachute plan” alongside the merger, viewing it as excessive amid perceived undervaluation. Post-failure, these triggers are voided, reverting executives to standard severance (estimated 1-2x salary for DuChene, ~$5-7M).
Implications for Core Scientific and the Industry
- For Core Scientific: The firm must now focus on organic growth, leveraging its CoreWeave contract for steady revenue (~$1B annually projected). However, leadership retention risks loom—DuChene remains in role, but failed incentives could spur exits in a talent-scarce AI sector. Shares are up 20% since the vote, trading at ~$18, implying a $4B+ market cap.
- Broader M&A Trends: This is the second failed CoreWeave bid for Core Scientific (after a June 2024 cash offer). It signals cooling AI hype, with investors rejecting “bird-in-hand” deals for standalone upside. Golden parachute scrutiny is rising: 2022 saw a 15.6% “say-on-pay” failure rate, up from 11.8% prior, driven by ballooning values (median CEO parachute hit $12.9M).
- Legal/Comp Angle: While not litigious yet, precedents like the 2023 Disney suit over excessive parachutes show shareholders may push clawbacks or reforms. Core Scientific’s board faces pressure to recalibrate incentives without M&A hooks.
| Aspect | Merger Proposal | Post-Failure Reality |
|---|---|---|
| Deal Value | $9B all-stock ($16.40/share) | Standalone focus; $10B CoreWeave contract intact |
| DuChene Payout | $43.8M (equity + cash + perks) | ~$5-7M standard severance if departed |
| Shareholder Sentiment | 55% against (est. from proxies) | Bullish on AI pivot; stock +20% |
| Industry Impact | Highlights AI bubble risks | Boosts scrutiny on exec comp in volatile sectors |
Core Scientific hasn’t commented on DuChene’s status, but filings suggest no immediate changes. As AI infrastructure booms (projected $200B market by 2028), watch for revised suitors or comp tweaks. For in-house counsel, this saga is a cautionary tale on aligning parachutes with shareholder alignment—excess can sink deals. Full details in the Law.com analysis; what’s your take on AI M&A’s next move?