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A Delaware judge who previously rejected Tesla Inc.’s Elon Musk’s $55 billion compensation package is raising new questions about whether the CEO’s massive benefits package should be reinstated despite the company’s shareholder approval.
Tesla’s lawyers argued Friday that the compensation should be reinstated after it was approved in a shareholder vote in June.
“Respecting titles is a testament to the strength of our system,” Musk’s lawyer, David Ross, told Treasury Secretary Catherine McCormick, according to the Associated Press. “It’s shareholder democracy at work.”
But McCormick wasn’t immediately convinced. According to The Wall Street Journal, the judge said he was “considering” their arguments and that the matter “is not over now.”
McCormick noted there is no legal precedent that would allow a post-trial vote to overturn a ruling that a corporate officer breached their fiduciary duties.
“This is unprecedented,” McCormick said, according to the Associated Press.
McCormick said in January that the original approval process for Musk’s compensation package was “deeply flawed” and that Musk had “extensive ties to individuals responsible for negotiating on Tesla’s behalf,” which invalidated the package.
The matter has been the subject of ongoing litigation since a lawsuit filed in 2018 by Tesla investor Richard Tornetta. Tornetta initially argued that Musk and Tesla breached their fiduciary duties by paying Musk a compensation package that “exceeded the bounds of reasonable judgment.”
Musk has not spoken in detail about the ongoing legal battle, but following the ruling in January, he wrote in a post on his social media platform, X, that “you should not incorporate in Delaware.”
He began the process of relocating Tesla and SpaceX out of Delaware this year and filed to legally transfer the operations to Texas.
Musk’s lawyer and a Tesla representative did not immediately respond to Business Insider’s request for comment.
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