Welcome to Extreme Investor Network, your go-to source for all things finance! Today, we’re diving into the recent legal battle surrounding Elon Musk’s record Tesla pay package.
In a recent court filing, Tesla argued that the legal team responsible for voiding Musk’s $56 billion pay package should receive a significantly lower legal fee than the $5.6 billion they initially requested. The company claimed that the lawsuit brought by shareholder Richard Tornetta, which led to the ruling voiding Musk’s pay package, provided little to no benefit for Tesla.
Interestingly, Tesla also made the case that if shareholders vote to ratify the voided pay package at the upcoming annual meeting, the lawsuit’s main benefit was simply to inform investors of the flawed negotiation process for awarding pay. This would allow shareholders to correct the process with a new vote.
The legal team behind the lawsuit included three law firms, Bernstein Litowitz Berger & Grossmann and Friedman Oster & Tejtel from New York, and Andrews & Springer from Delaware. Tesla is currently urging shareholders to support a proposal to restore Musk’s pay package, as well as a move of the company’s legal home to Texas from Delaware.
Chancellor Kathaleen McCormick voided the 2018 pay deal in January, citing Musk’s improper domination of the negotiations surrounding his compensation. The legal team that brought the case requested Tesla to pay them with approximately 29 million Tesla shares as part of the shares that Musk would return to the company due to his pay being voided.
However, Tesla argued that no stock was actually returned to the company since Musk never exercised any of the stock options underlying his compensation. Numerous Tesla shareholders have voiced their objections to the legal fee request, with one shareholder with 19,000 shares formally objecting and being represented by the law firm Munger Tolles & Olson.
Stay tuned to Extreme Investor Network for the latest updates on this ongoing legal saga and more exclusive financial insights to help you make informed investment decisions!