Attorneys for Elon Musk and Tesla's corporate directors are now asking a Delaware judge to vacate a previous ruling requiring the company to rescind its $56 billion pay package for the tech leader.
Last Friday, Delaware Chancery Court Judge Kathaleen St. J. McCormick heard arguments on whether a June 13 vote among Tesla's shareholders to revive Musk's pay package justifies changing her previous ruling. In January, McCormick concluded that Musk engineered the $56 billion compensation plan in sham negotiations with directors who were not independent.
Defense attorneys said the June 13 vote, where shareholders ratified Musk's pay package by an overwhelming margin, makes it clear that Tesla shareholders believe the tech head is entitled to the 11-figure compensation.
"Honoring the shoulder vote would affirm the strength of our corporate system," David Ross, an attorney for Musk and the other individual defendants, told McCormick, as quoted by CBS News. "This was stockholder democracy working."
"We're asking you to give effect to the vote," Ross said during the hearing, as reported by Fortune.
Ross noted that an investor vote had never been used to overturn a court ruling. It is unclear if McCormick will recognize the vote. She does not have any legal obligation to uphold the results of the vote.
Musk's Compensation Package
Musk's $56 billion pay package was first approved by Tesla shareholders in 2018. At the time, it was widely regarded as the largest ever compensation package ever made by a public company.
In addition to the $56 billion payout, Musk will also receive billions of dollars in stock options if Tesla's profits, sales, and stock market value increase significantly. This was already achieved, enabling Musk to earn all the options. However, a Tesla shareholder later filed a suit in the Delaware court and said the company's board did not act independently when putting together Musk's package.
In the January ruling, McCormick ruled that Musk oversaw his own pay package. McCormick also ruled that Tesla failed to disclose Musk's personal and business ties with board directors.
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