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Tesla shareholder seeks to bar Musk from dodging from Delaware pay ruling
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Tesla shareholder seeks to bar Musk from dodging from Delaware pay ruling
Apr 24, 2024 9:41 AM

WILMINGTON, Delaware, April 24 (Reuters) -

A Tesla investor who successfully sued to void CEO Elon

Musk's $56 billion pay package asked a Delaware judge on

Wednesday to prevent the electric carmaker from bucking the

court's authority by moving its legal home to Texas.

Richard Tornetta's legal team asked Delaware Chancellor

Kathaleen McCormick to rule on his request before Tesla's June

13 annual meeting, where shareholders will vote on

reincorporating in Texas and approving Musk's 2018 pay package.

"Defendants cannot now seek to run from this

jurisdiction and undo years of litigation because they are

unhappy with the outcome," said the plaintiff's legal team in a

filing.

Tesla has been incorporated in Delaware for 21 years and

has required shareholders to bring legal action in that state,

the filing said.

Musk and Tesla did not immediately respond to requests

for comment.

In January, McCormick voided the pay package, which Tesla

estimated is worth up to $56 billion, calling it "unfathomable."

The judge found the stock option deal was negotiated by a

board that lacked independence from Musk and that the company

hid key details from shareholders before they approved it in a

2018 vote.

Musk has criticized Delaware and its courts following the

ruling and has said the state, home to a majority of large

publicly traded corporations, is trying to prevent companies

from leaving.

The pay package granted stock option awards for

approximately 304 million shares if Tesla hit various

milestones, which it did. Musk has not exercised the stock

options, which allow him to buy the Tesla stock at a deep

discount.

Tornetta's legal team also asked the court on Wednesday

to seize the stock options as another measure to prevent Tesla

and Musk from avoiding the January ruling.

To try to reinstate the pay package, Tesla has

employed an obscure legal maneuver

in asking shareholders to "ratify" Musk's 2018 pay. Doing

so could keep Musk motivated and potentially give Tesla an

argument against the

$6 billion in attorneys' fees

that Tornetta's lawyers have sought, the company has said.

The shareholder's request comes a day after Tesla forecast

rising sales this year and unveiled plans to roll out more

affordable models in early 2025. This eased worries about slower

growth and shares jumped more than 10% on Wednesday in early

trading.

(Reporting by Tom Hals in Wilmington, Delaware)

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