Tesla launched a fresh bid to secure legal reinstatement of Elon Musk’s controversial $56 billion pay package on Monday – days after the company’s shareholders voted to ratify the record-setting agreement.
In January, Delaware Chancery Court Judge Kathaleen McCormick voided Musk’s stock-based compensation plan, which she referred to as an “unfathomable sum.” The package was challenged in a lawsuit filed by Tesla shareholder Richard Tornetta.
Tesla’s lawyers argued that the two sides should make their legal argument regarding the potential implications of last Thursday’s vote at the company’s annual meeting, where shareholders backed the deal.
“The approval of ratification by Tesla’s stockholders significantly impacts the claims and issues in this action, including the court’s final judgment,” Tesla attorneys said in a letter to McCormick last Friday.
An attorney for the plaintiff shareholder fired back, arguing that the vote had “no legal effect” on the judge’s earlier decision to void the $56 billion package. The attorney is set to file a legal brief explaining his reasoning by Friday.
Tesla has acknowledged that shareholders’ ratification of the voided deal had created a “novel” outcome – and that it was unclear if the vote would prompt McCormick to reverse course.
When issuing her decision last January, McCormick questioned whether the package was truly necessary for Tesla to retain Musk’s services as CEO.
The judge also blasted the process by which Tesla’s board initially approved the package and found that the company had withheld key information from shareholders.
Tesla shareholders also approved a resolution at the annual meeting to change the company’s state of incorporation to Texas from Delaware. Nearly 90% voted in favor of the move.
Musk had backed the change in the immediate aftermath of the judge’s decision to nix his compensation.
Last Friday, Musk shared an image of a vanilla-frosted sheet cake with the words “Vox Populi, Vox Dei” – Latin for “the voice of the people is the voice of God” – written in red letters, along with a big heart.
Chancellor Kathaleen McCormick is pictured. Eric Crossan via Wikipedia
“Sending this cake to Delaware as a parting gift,” Musk wrote on X.
With Post wires