Judge to Consider $6 Billion Legal Fees in Case of Elon Musk’s Voided Pay Package

Tesla shareholders recently voted to ratify Elon Musk's multibillion-dollar pay package. However, the fate of Musk's award now rests in the hands of a Delaware judge who will be considering a $6 billion legal fees request from lawyers who successfully voided the pay package despite the shareholder approval.

Legal Battle Overview

In January, Chancellor Kathleen McCormick of the Delaware Chancery Court made a ruling against Elon Musk's pay package, which would have granted the Tesla CEO over $55 billion in stock at that time. The ruling highlighted serious flaws in the approval process of Musk's compensation plan, pointing out a conflict of interest within Tesla's board, which includes Musk's brother as a member.

Legal Fees Dispute

Following the court's decision, lawyers representing Richard Tornetta, the Tesla shareholder who contested the compensation plan, are now seeking $6 billion in legal fees for their role in getting Musk's package annulled. Musk criticized this request as "criminal."

Shareholder Vote and Subsequent Developments

In a turn of events, shareholders voted in June to re-approve Musk's pay package and maintain the existing board structure, which includes Kimbal and James Murdoch. While this vote does not automatically reinstate Musk's pay plan, it does strengthen Tesla's legal arguments.

Upcoming Hearing and Legal Proceedings

Subsequently, Tesla's defense team filed a motion arguing that the shareholder ratification vote validates Musk's stock options award and could impact the ongoing litigation. Chancellor McCormick is set to decide on the fate of the pay package and the validity of the $6 billion legal fees claim.

Legal Expert Opinion

James Park, a securities regulation expert at the University of California, Los Angeles, emphasized the importance of considering the shareholder vote in assessing the overall value of the litigation. He noted that the judge's response indicates a need to carefully evaluate the case before making a final decision.

Attorneys representing Tesla and Tornetta have not provided any comments on the matter as of now.

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By: lloydlee@insider.com (Lloyd Lee)
Title: Judge to Consider $6 Billion Legal Fees in Case of Elon Musk’s Voided Pay Package
Sourced From: www.businessinsider.com/elon-musk-tesla-compensation-package-attorney-fees-6-billion-court-2024-6
Published Date: Fri, 28 Jun 2024 03:07:56 +0000