Musk won USD 56 billion payday because of vote, Tesla argues in court

Tesla claims victory in Elon Musk’s USD 56 billion pay package dispute following shareholder ratification, despite a previous court ruling rescinding it earlier this year. The company’s court filing, disclosed on Thursday, asserts that shareholders’ recent vote to approve the 2018 stock options package overrides the earlier judicial decision.

This move comes in response to a Delaware judge’s January ruling that invalidated Musk’s compensation plan, citing his undue influence over the negotiation process and Tesla’s alleged misrepresentation of critical details to shareholders. The ongoing legal uncertainty casts a shadow over Musk’s tenure at Tesla, amid challenges such as sluggish sales and heightened competition. Musk has hinted at exploring ventures outside the company if he fails to secure a larger ownership stake.

Tesla outlined its position in a proposal to Delaware’s Court of Chancery, seeking a final order that would affirm “judgment is entered for the defendants.” Conversely, the shareholders’ legal team advocates maintaining the original ruling voiding Musk’s pay package and seeks billions in Tesla stock as legal fees.

Chancellor Kathaleen McCormick has scheduled oral arguments for July 8 to deliberate on the legal fee issue. She has also requested briefs from both parties to assess the impact of the recent shareholder vote on the case’s proceedings. While a final decision could take several weeks, McCormick’s assessment of shareholder sentiment could potentially influence the outcome of the fee dispute, given the shareholder approval of Musk’s compensation.