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Tesla argues shareholder vote fixes issues in Musk's pay

package

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Plaintiff's legal team claims shareholder vote has no

legal

impact

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Musk's pay package worth around $48 billion at Friday's

share

price

By Tom Hals

WILMINGTON, Delaware, June 21 (Reuters) - A Delaware

judge should recognize a vote by Tesla shareholders in favor of

Elon Musk's $56 billion pay package and reverse her January

ruling that voided the compensation, the company said in a

filing that was made public on Friday.

In addition, Chancellor Kathaleen McCormick should not consider

a request for a record $6 billion legal fee by the lawyers that

led the case against Musk's 2018 pay package, according to the

filing in Delaware's Court of Chancery.

Tesla and the legal team for Richard Tornetta, the

shareholder who sued over the pay package, are wrestling over

the best way to resolve the case and compensate the company's

chief executive.

Musk said earlier this year that unless he had a larger stake in

Tesla he would prefer to build some products outside the

company, creating uncertainty about his future while Tesla is

struggling with slower sales and stiffer competition.

Tesla's investors voted on June 13 in favor of the package of

stock options. Many investors said they felt Musk should be

rewarded because the value of the company increased more than 10

times after the pay package was originally agreed in 2018.

Tesla said in the court filing that the judge should

determine the impact of the shareholder vote, which in turn

could drastically reduce the legal fee.

It said that it plans to make a motion to reverse the

January ruling and that it should now win the case.

The company has argued that by having the pay package

reviewed by an independent board member and reapproved by

shareholders it fixed McCormick's finding that Musk dominated

the pay negotiations and that shareholders lacked key

information in the 2018 vote.

Tornetta's legal team has rejected that approach. They argued

the shareholder vote on Musk's pay had no legal impact and even

Tesla has acknowledged that the process to reverse a legal

opinion through a vote was "novel."

The shareholder lawyers want a decision on their legal fee

as the next step in the case.

When the company achieved the last milestone in the pay

package, it was worth $56 billion, according to Tesla. The

package is worth around $48 billion at Friday's share price of

$182.19.