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Tesla kicks off legal fight to reinstate Musk's pay
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Tesla kicks off legal fight to reinstate Musk's pay
Jun 17, 2024 7:44 AM

WILMINGTON, Delaware, June 17 (Reuters) - Tesla began

its fight for legal recognition of a shareholder vote favoring

Elon Musk's record compensation, telling a Delaware judge that

it "significantly impacts" her ruling voiding the pay, according

to a letter made public on Monday.

Tesla wrote to Chancellor Kathaleen McCormick that the

parties in the pay package case should now lay out their legal

interpretations of Thursday's ratification of Musk's pay, rather

than moving ahead with the case on the prior schedule.

"The approval of ratification by Tesla's stockholders

significantly impacts the claims and issues in this action,

including the court's final judgment," Tesla attorneys told

McCormick in the letter, which was filed with the Court of

Chancery on Friday.

Greg Varallo, a shareholder attorney in the case against the

pay package, said the ratification had "no legal effect" on the

case and that he would explain his argument in a brief due

Friday.

Tesla has said the ratification process was "novel" and it

was unclear if McCormick and the Delaware Supreme Court would

accept the result.

Tesla has argued that the ratification has now cured the

problems raised in McCormick's ruling in January.

The judge found Musk controlled the 2018 process that led to

the pay package and that Tesla concealed key information from

shareholders about the ease of the targets the company had to

meet for Musk to be paid.

A special committee of its board reviewed the pay package

and determine it was in the best interest of shareholders, which

Tesla said fixed the problem of Musk's dominance in the process.

The vote was corrected by providing shareholders hundreds of

pages of added disclosures, including McCormick's 200-page

opinion.

McCormick also has to determine a fee for the shareholder

legal team before Tesla can appeal her ruling to the Delaware

Supreme Court.

The shareholder's attorneys are seeking around $5 billion,

in the form of Tesla stock as a legal fee and Tesla argued they

should be paid around $13.6 million.

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