Judge ensures Tesla won’t challenge Musk’s compensation decision outside of Delaware

Judge ensures Tesla won’t challenge Musk’s compensation decision outside of Delaware
Judge ensures Tesla won’t challenge Musk’s compensation decision outside of Delaware

The Delaware judge who overturned Elon Musk’s record pay to Tesla told affected parties she had received assurances from the electric vehicle maker that it would not use the upcoming shareholder vote to challenge her decision .

WHY IT IS IMPORTANT

The team of shareholder lawyers who sued Elon Musk’s $56 billion in compensation had asked Chancellor Kathaleen McCormick to issue orders to prevent their case from being overturned by a court in Texas.

Next month, the company’s shareholders will vote to “ratify” the compensation plan that Ms. McCormick canceled and to reincorporate Tesla in Texas.

CONTEXT

The shareholder’s legal team said in a court filing in April that Tesla and Musk could attempt to overturn McCormick’s decision in another jurisdiction, such as Texas.

Tesla called the assumption “speculation” in court documents and said Delaware would retain jurisdiction over wage disputes, comments that Ms. McCormick took as assurance that the company would not attempt to circumvent its previous ruling.

KEY QUOTE

“If I have misinterpreted the defendants’ position, defense counsel – as officers of the court – have a duty to correct it. In the meantime, the defendants’ statements give me great reassurance,” Ms McCormick said in his seven-page letter.

THE FOLLOWING

Tesla shareholders will vote on June 13 whether they still want to receive Mr. Musk’s salary and reincorporate in Texas, where the company is headquartered, instead of Delaware, where the majority of major corporations listed on the stock exchange have their head office.

Ms. McCormick must decide whether the shareholders’ legal team should receive the $6 billion she sought from Tesla in legal fees before Musk and Tesla can appeal. She scheduled a hearing for July 8 on the issue of attorney fees.

THE ANSWER

Greg Varallo, lawyer for shareholder Richard Tornetta, declined to comment.

Lawyers for the company did not immediately respond to a request for comment. (Reporting by Peter Henderson; Editing by Stephen Coates)

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