Attorneys for Elon Musk and Tesla’s corporate directors are seeking to overturn a ruling that mandated the company to revoke a substantial pay package for Musk. The ruling, issued by Chancellor Kathaleen St. Jude McCormick in January, found that Musk had orchestrated the 2018 pay package through questionable negotiations with non-independent directors. The package, initially valued at around $56 billion, fluctuated based on Tesla's stock price over the years.
Despite the court's decision, Tesla shareholders convened in June and overwhelmingly reapproved Musk’s 2018 pay package. Defense attorneys argue that this shareholder vote demonstrates the shareholders' unwavering support for Musk's entitlement to the pay package, despite the flaws highlighted in McCormick's ruling.
The defense team is not disputing the court's findings but is requesting the judge to annul the order instructing Tesla to rescind the pay package. However, McCormick expressed skepticism towards this argument, emphasizing that Delaware law lacks precedent for allowing a post-trial shareholder vote to validate breaches of fiduciary duty by corporate directors.
While the defense cited shareholder ratification as a remedy for corporate governance errors, critics, including a shareholder who filed the lawsuit, argue against prioritizing the majority shareholders' will over legal proceedings. The plaintiff's attorney contended that the June shareholder vote holds no legal weight and should not influence the court's decision.
McCormick has yet to issue a ruling on the matter and is also deliberating on a substantial fee request by plaintiff attorneys, who are seeking legal fees in the form of Tesla stock valued at over $7 billion.
