Tesla Argues Elon Musk Won Battle Over $56 Billion Pay Package
Tesla, citing shareholder vote, claims Elon Musk has won the legal battle over $56bn pay package, despite judge ruling against it
Electric vehicle giant Tesla is claiming Elon Musk won his legal battle over his $56 billion pay package, because shareholders have voted for the compensation.
Reuters reported that this was the argument made in a court filing made public on Thursday, and it comes after a judge in Delaware had rescinded Musk’s pay package earlier in the year.
In January 2024 Chancery Court Chancellor Kathaleen McCormick had struck down the 2018 pay deal, citing Musk’s “extensive ties” with board members, as well as concerns that the firm had misled shareholders about key details.
Musk’s Pay
Multiple institutional Tesla shareholders have objected to Musk’s huge financial compensation package – at a time when the EV maker had opted to axe thousands of staff, and is facing falling sales and eroding profit margins, as slowing demand for EVs around the world.
However Tesla shareholders voted in early June to reinstate Musk’s $56bn pay package, and also approved the firm’s incorporation move away from Delaware to Texas.
The pay agreement will also give Elon Musk 25 percent voting control of Tesla.
In an April regulatory filing Tesla had valued Elon Musk’s package at $44.9 billion, but it was once worth as $56 billion.
The compensation package decline in value reflects Tesla’s stock price fall, which has declined about 25 percent so far this year.
Regulatory filing
Now in a filing made two weeks after Tesla shareholders voted to ratify the 2018 package of stock options.
Tesla made its argument in its proposal for how the judge, Chancellor Kathaleen McCormick of Delaware’s Court of Chancery, should craft a final order that is needed to implement the January ruling.
The institutional shareholders’ legal team wants the judge to stick with her original ruling voiding Musk’s pay package. They want her to order Tesla to pay them potentially billions of dollars worth of Tesla stock as a legal fee award.
Tesla’s has said a fair fee might be as low as $13.6 million, Reuters reported.
On Thursday, Judge McCormick reportedly ordered the parties to begin preparing briefs laying out their views on the effect of the shareholder vote on the case. She also asked the parties to agree on a date in late July or early August for oral arguments on the issue.
Judge McCormick will hear oral arguments over the legal fee on 8 July and she might take at least a few weeks before ruling.
According to Reuters, even if she does not reverse her January ruling, she might recognize that the shareholder vote demonstrated that there was little value in winning the case because Tesla shareholders want the record-breaking compensation. That would apparently undermine the plaintiff’s attorneys fee request, which is based on the value they provided to the company by rescinding the pay package.
