Elon Musk’s Tesla Pay Package Faces Scrutiny Again After Judge’s Rejection

A judge recently raised concerns about the reinstatement of Elon Musk's multi-billion-dollar pay package at Tesla, which was initially rejected.

Judge Questions Reinstatement

Tesla's legal team is arguing that a shareholder vote in favor of the pay package should be sufficient to revive it. However, the judge who previously invalidated the package expressed skepticism about its restoration despite shareholder approval.

Legal Argument

During a hearing, Tesla's lawyers contended that the pay package should be reinstated based on a shareholder vote held in June that supported it. David Ross, an attorney representing Musk, emphasized that honoring the shareholder vote would demonstrate the effectiveness of the corporate governance system.

Judge's Response

The judge, Chancellor Kathaleen McCormick, did not immediately agree with the argument put forth by Tesla's legal team. She stated that she would carefully consider their points and indicated that the issue was far from being resolved. McCormick highlighted the absence of legal precedent allowing a post-trial vote to override a prior decision where corporate officers were found to have violated their fiduciary responsibilities. She noted that such a reversal had never been attempted before.

Background of the Case

Earlier this year, McCormick had criticized the flawed approval process of Musk's pay package and raised concerns about Musk's close connections with individuals involved in negotiating on Tesla's behalf. These factors led her to invalidate the pay package initially. The legal dispute originated from a lawsuit filed in 2018 by Tesla investor Richard Tornetta, alleging that Musk and the company had breached their fiduciary duties by offering Musk an excessively generous pay package.

Despite the ongoing legal battle, Musk has not extensively commented on the matter. However, he did express his dissatisfaction with the situation by recommending against incorporating companies in Delaware. Subsequently, Musk initiated the process of relocating Tesla and SpaceX from Delaware to Texas.

Requests for comments from Business Insider directed towards Musk's lawyers and Tesla representatives remained unanswered at the time of reporting.

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By: ktangalakislippert@businessinsider.com (Katherine Tangalakis-Lippert)
Title: Elon Musk’s Tesla Pay Package Faces Scrutiny Again After Judge’s Rejection
Sourced From: www.businessinsider.com/judge-questions-shareholder-restoration-of-elon-musk-tesla-pay-package-2024-8
Published Date: Sat, 03 Aug 2024 01:09:38 +0000