In a recent development, Tesla has effectively allayed concerns raised by a Delaware judge regarding the impact of its attempted incorporation move to Texas on Elon Musk’s CEO compensation case. Chancellor Kathaleen McCormick, the judge who invalidated Elon Musk’s USD 55 billion compensation package, citing Tesla’s board’s alleged deception of investors, revealed in a recent letter that Tesla’s legal representatives have provided assurances. They assured her that the company does not intend to exploit its upcoming shareholder vote on both the compensation package and the incorporation move to Texas as a means to sidestep the ongoing case.
Plaintiffs’ attorneys have sought to expedite the proceedings, scheduled for a hearing on July 8, to address their request for an exorbitant USD 6 billion legal fee. Their apprehension stemmed from the fear that Tesla might leverage the votes on the incorporation move and compensation package to evade the jurisdiction of the Delaware court—a concern echoed by several Tesla shareholder influencers.
Tesla’s legal team swiftly dismissed these speculations as “rank speculation,” prompting Chancellor McCormick to find solace in their assurances. She emphasised that if her interpretation of the defendants’ stance was incorrect, Tesla’s defense counsel, as officers of the court, had a duty to rectify it. Nevertheless, she expressed confidence in the statements provided by the defendants.
Meanwhile, amidst ongoing shareholder voting, culminating in the annual Tesla shareholders meeting on June 13, the company’s board has embarked on an assertive campaign. This includes the launch of a dedicated website and advertising efforts aimed at swaying votes in favor of the proposed changes.
The shareholder showdown is intensifying, with recent reports highlighting the opposition stance taken by a significant pension fund, which has not only declared its intent to vote against the proposals but also encouraged fellow shareholders to follow suit.