Tesla launched a new effort to secure the legal restoration of Elon Musk’s controversial $56 billion compensation package on Monday, days after the company’s shareholders voted to ratify the record-breaking deal.
In January, Delaware Chancery Court Judge Kathleen McCormick invalidated Musk’s stock-based compensation plan, which she called “incalculable,” and which was the subject of a lawsuit brought by Tesla shareholder Richard Tornetta.
Tesla’s lawyers have argued that both sides should make legal arguments about the potential impact of the vote at the company’s annual meeting last Thursday, when shareholders supported the deal.
“The ratification approval by Tesla’s shareholders will have a significant impact on the claims and issues in this litigation, including the Court’s final judgment,” Tesla’s lawyers said in a letter to McCormick last Friday.
Lawyers for the plaintiff shareholders fought back, arguing that the vote had “no legal effect” on the judge’s earlier decision to strike down the $56 billion package. The lawyers plan to file a legal brief by Friday explaining their reasons.
Tesla acknowledged that shareholder approval of the voided deal produced a “new” result and said it was unclear whether the vote would prompt McCormick to change course.
When he announced his decision last January, McCormick questioned whether Tesla really needed the package to keep Musk as CEO.
The judge also harshly criticized the process by which Tesla’s board originally approved the package, finding that the company concealed important information from shareholders.
Tesla shareholders also approved a resolution at the annual meeting to change the company’s state of incorporation from Delaware to Texas, with roughly 90% of voters voting in favor of the change.
Musk supported the change shortly after a judge ruled against him receiving his compensation.
Last Friday, Musk shared an image of a sheet cake with vanilla frosting and the words “Vox Populi, Vox Dei” (Latin for “The voice of the people is the voice of God”) written in red lettering alongside a large heart.
“I’m sending this cake as a farewell gift to the state of Delaware,” Musk wrote to X.
With post wire
