According to a public court filing on Thursday, Tesla asserts that Elon Musk has won the legal battle over his $56 billion pay package because shareholders voted to ratify the compensation. This comes despite a judge’s earlier decision to rescind the package.
Two weeks ago, Tesla shareholders voted to approve Musk’s 2018 stock options package. The vote followed a January ruling by Delaware Chancellor Kathaleen McCormick, which voided the compensation on the grounds that Musk improperly controlled the negotiation process and the company misled shareholders about key details.
This legal battle is crucial as it affects Musk’s relationship with Tesla, which faces challenges like slower sales and increased competition. Musk has hinted that he might develop some products outside the company if he does not secure a larger ownership stake.
Tesla’s recent filing proposes how Chancellor McCormick should finalize her January ruling. Tesla argues that the final order should state that “judgment is entered for the defendants,” effectively supporting Musk’s position.
However, the shareholders’ legal team insists that the judge uphold her original ruling, voiding Musk’s pay package. They are seeking potentially billions of dollars worth of Tesla stock as a legal fee award. Tesla has countered, suggesting a fair fee might be as low as $13.6 million.
On Thursday, McCormick ordered both parties to prepare briefs outlining their views on the impact of the shareholder vote. She also requested that they agree on a date for oral arguments in late July or early August. The hearing for oral arguments over the legal fee is scheduled for July 8, and McCormick may take several weeks before ruling.
Even if McCormick does not reverse her January ruling, she might recognize that the shareholder vote indicates little value in the plaintiffs’ win, given that Tesla shareholders support the compensation package. This could weaken the plaintiffs’ attorneys’ fee request based on the perceived value they provided by rescinding the pay package.
