WILMINGTON, Delaware – Tesla (NASDAQ: TSLA) claims Elon Musk won his legal battle over his $56 billion pay package because shareholders supported the compensation, despite a judge rescinding it earlier this year, as per a court filing made public on Thursday.
The company’s filing comes two weeks after Tesla shareholders voted to ratify the 2018 package of stock options. Tesla held the vote following a January ruling by a Delaware judge to void the compensation because Musk improperly controlled the negotiation process and the company misled shareholders about key details.
The uncertainty in the case hangs over Musk’s relationship with Tesla, which is struggling with slower sales and stiffer competition. He has said he might develop some products outside the company if he doesn’t obtain a larger ownership stake.
Tesla submitted its proposal outlining how Chancellor Kathaleen McCormick of Delaware’s Court of Chancery should structure the final order necessary to enforce the January ruling. Tesla said the final order should state that “judgment is entered for the defendants.”
The shareholders’ legal team wants the judge to stick with her original ruling voiding Musk’s pay package. They want her to order Tesla to pay them potentially billions of dollars worth of Tesla stock as a legal fee award.
Tesla has said a fair fee might be as low as $13.6 million.
On Thursday, McCormick ordered the parties to begin preparing briefs laying out their views on the effect of the shareholder vote on the case. She also requested the parties to agree on a late July or early August date for oral arguments on the issue.
McCormick will hear oral arguments over the legal fee on July 8 and she might take at least a few weeks before ruling.
Even if she doesn’t reverse her January ruling, she might acknowledge that the shareholder vote showed little benefit in winning the case because Tesla shareholders support the record-breaking compensation. That would undermine the plaintiff’s attorney fee request, which hinges on the value they claim to have added by canceling the pay package.
(Source: Reuters)
Zabih Ullah is a seasoned finance writer with more than ten years of experience. He is highly skilled at analyzing market trends, decoding economic data, and providing insightful commentary on various financial topics. Driven by his curiosity, Zabih stays updated with the latest developments in the finance industry, ensuring that his readers receive timely and relevant news and analysis.
