Kenny Polcari, chief market strategist at SlateStone Wealth, reacted to Tesla shareholders voting to reinstate Elon Musk’s compensation package on Varney & Co.
Tesla argues in court documents: CEO Elon Musk The company won a legal battle over the $56 billion compensation plan after a Delaware judge struck down the plan earlier this year, but shareholders voted to reauthorize the pay.
The allegations, made public Thursday, Tesla Shareholders They voted to approve Musk’s compensation plan, which was approved in 2018.
In January, Delaware Court of Chancery Chief Justice Katherine McCormick invalidated the plan, finding that Musk’s close relationship with some of the directors influenced negotiations and that Tesla had not properly informed shareholders that it expected to achieve many of the plan’s performance-based goals.
Tesla is arguing that the judge should enter a final judgment in favor of the defendants. The company is also seeking to reduce the legal fees awarded to the shareholders’ lawyers in the lawsuit to $13.6 million.
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Tesla claims that Elon Musk won the dispute over his compensation package after shareholders voted to reinstate it. (Apu Gomez/Getty Images/File)
Lawyers for shareholder Richard Tornetta, who filed a lawsuit seeking to invalidate the compensation package, were seeking 29 million Tesla shares, valued at more than $5 billion, to cover legal costs.
In a filing on Friday, Tesla said it could pay $1.1 billion as an alternative, a move it said was based on U.S. precedent. Delaware Court of ChanceryHowever, they described the amount as “unreasonably low.”
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| TSLA | Tesla Inc. | 197.42 | +1.05 | +0.53% |
The judge on Thursday ordered both sides to begin drafting briefs outlining their positions on how the shareholder vote will affect the case, and set a trial date for late July or early August. Oral Argument Regarding that issue.
Tesla shareholders vote to reinstate Musk’s $56 billion compensation package
Tesla’s shares have fallen this year due to weak consumer demand for electric vehicles. (Joe Raedl/Getty Images/File)
McCormick has scheduled oral arguments on costs for July 8, and it could be several weeks before a decision is made on the matter.
Even if McCormick does not overturn the January ruling that invalidated the compensation package, Tesla shareholders want Musk to get paid and may perceive a shareholder vote to reinstate it as a sign that there was little value in winning the lawsuit. Record-breaking compensation.
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Tesla CEO Elon Musk is believed to be the highest-paid CEO of a publicly-traded US company. (Etienne Laurent/AFP via Getty Images/File)
This would undermine the plaintiff’s attorneys’ fees, which are claimed based on the value the reversal of the pay package provided to the company.
Tesla said Musk’s compensation package includes stock options that are contingent on reaching performance-based milestones and must be held for five years before they can be exercised. At the time of the last milestone achievement, the compensation package was worth $56 billion. The value of the compensation package will fluctuate based on the price of Tesla’s stock, which has fallen more than 20% since the beginning of the year.
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Reuters contributed to this report.
