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Elon Musk’s $45bn Tesla pay package not a done deal, say legal experts | Elon Musk

Tesla’s Elon Musk’s fight to reinstate his $45bn (£35bn) pay package is far from over, despite shareholders backing the CEO’s pay deal, legal experts say.

Investors in the electric car maker re-approved the wage pact on Thursday after a judge in the US state of Delaware invalidated it, with the company’s chairman Robin Deanholm already promising to “go back to court.”

But questions remain about whether Musk will be able to access an equity-based package.

Lawyers representing Tesla shareholder Richard Tornetta, who filed a lawsuit seeking to invalidate Musk’s compensation package, said in a statement Thursday that the vote was “deeply flawed.”

“We believe the ratification vote that Elon demanded and forced is deeply legally flawed and invalid and does not affect our case. We will respond to any claims that are brought in the future,” said Greg Ballarro, a partner at the law firm Bernstein Litowitz Berger & Grossman.

Judge Katherine McCormick threw out Musk’s compensation package in January, and the directors Not independent enough Something I heard from Tesla’s CEO during package negotiations.

Anne Lipton, a professor at Tulane University Law School, said Tesla’s vote was “unprecedented” and that litigation over the arrangement will likely continue in Delaware, where Tesla was incorporated when the original compensation deal was reached in 2018.

“It is unclear what the legal implications will be. [of the vote] “Assuming no settlement is reached, the litigation will continue before Chief Justice McCormick. Tesla will likely argue that a new vote corrects the flaws in the original award and reinstates Musk’s compensation, but the plaintiffs will likely argue that this is not the case.”

Lipton said McCormick’s decision will likely be appealed by the losing party and will likely end up in the Delaware Supreme Court. “At that point, the Delaware Supreme Court will be faced with two questions: Was McCormick correct in initially striking down the bill? And if so, can the bill be reinstated with a new vote?”

Eric Tully, a professor at Columbia Law School, noted that Musk threatened in January to develop AI and robotics products outside the company if he did not receive enough voting power, and said Musk’s comments ahead of Thursday’s vote could be seen as intimidation of shareholders.

“We expect significant arguments if Tesla uses today’s vote as a reason to overturn the Chancery Court’s decision,” Tully said. “In particular, there is a plausible argument that today’s vote was the result of coercion and therefore is invalid.”

Brian Quinn, a professor at Boston University Law School, said a Delaware court would likely require Tesla to prove that its updated process was conducted independently of Musk and that the vote was “procedurally fair.”

“This is an unprecedented situation so it’s important to remember that the burden of litigation is entirely on the commission… this is not over yet,” he said.

Appearing before shareholders after winning the vote, Musk said: “First of all, I want to say I love you guys, for real!”

Tesla shareholders at its annual meeting on Thursday also voted to move Tesla’s legal entity from Delaware to Texas, where the company is headquartered, but McCormick said litigation over compensation packages would remain in Delaware. I wrote last month She said Tesla does not expect to “litigate any matters related to this litigation outside of Delaware.”

But Musk’s new compensation package will be governed by the laws of the company’s new home base, Tully said. “Now that Tesla is reorganizing in Texas, any decisions going forward will be governed by Texas law,” he said.