Elon Musk, the CEO of Tesla, is engaging in discussions with a shareholder after his $56 billion compensation plan was rejected. The shareholder, who won a verdict last month voiding Musk’s pay package, is now seeking a pause in the ruling until an appeal is resolved. Greg Varallo, the shareholder’s attorney, stated that both sides are willing to agree to a stay if they can come to an agreement on an appeal bond.
This recent development indicates that Musk intends to appeal the ruling, which he has criticized on social media. He has even mentioned seeking shareholder approval to move Tesla’s state of incorporation to Texas, where the company’s headquarters are located.
Before Musk can proceed with his appeal, both sides will propose a final order for approval by Judge Kathaleen McCormick. This order will also include a petition for legal fees, which will be paid by Tesla. Given the size of the verdict, it is expected to be one of the largest legal fees ever. However, Tesla is likely to oppose this payment.
Musk and the shareholder have until March 1 to inform the court about their position on fees. If McCormick approves the fee and final order, Musk will have 60 days to file an appeal with the Delaware Supreme Court. It is anticipated that resolving the appeal would take at least six months.
As of now, Musk’s attorney has not responded to requests for comments regarding the matter. The lawsuit challenging Musk’s pay was filed by shareholder Richard Tornetta, who pursued it on behalf of Tesla. The recent ruling rescinded Musk’s $56 billion pay package, which consisted of stock options that he has not yet exercised. These options allow him to buy Tesla stock at a discounted price, but he must hold onto it for five years.
In her ruling, Judge McCormick stated that Musk improperly controlled the pay negotiation process and that shareholders lacked necessary information when they voted to approve the package in 2018.
This ongoing legal battle between Musk and the shareholder highlights the complexities and controversies surrounding executive compensation in large corporations. It also sheds light on the power dynamics within Tesla and the influence that shareholders have in holding CEOs accountable for their actions. As the case progresses, it will be interesting to see how the court rules on the appeal and what implications it may have for Musk’s future compensation plans.
