In a court document released Thursday, Tesla claims Elon Musk won his $56 billion pay package lawsuit because shareholders voted for it despite a judge rescinding it earlier this year
Tesla shareholders voted to ratify the 2018 stock option bundle two weeks before the company’s filing. The vote was conducted by Tesla in response to a January ruling by a Delaware judge to nullify the compensation.
The judge found that Musk had improperly controlled the negotiation process and that the company had misled shareholders about critical details.
Musk’s relationship with Tesla, which is grappling with slower sales and more intense competition, must be clarified by the ambiguity surrounding the case.
He has indicated that he may pursue the development of products outside of the organization if he cannot secure a more substantial ownership stake.
Tesla presented its argument in its proposal for the final order required to implement the January judgment. The judge, Chancellor Kathleen McCormick of Delaware’s Court of Chancery, is responsible for crafting the order.
Tesla stated that the final order should include the phrase “judgment is entered for the defendants.”
The shareholders’ legal team hopes the judge will adhere to her initial decision, invalidating Musk’s compensation package. They are seeking an order from her to compel Tesla to pay them potentially billions of dollars in Tesla stock as a legal fee award.
Tesla has indicated that a reasonable fee could be as low as $13.6 million.
In an order issued on Thursday, McCormick directed the parties to commence the preparation of memoranda that would articulate their perspectives on the case’s impact on the shareholder vote.
She also requested that the parties concur on a date in late July or early August for oral arguments on the matter.
McCormick is expected to hear oral arguments regarding the legal fee on July 8, and she may delay her decision for at least a few weeks.
Even if she does not overturn her January ruling, she may acknowledge that the shareholder vote illustrated minimal value in winning the case, as Tesla shareholders desire the record-breaking compensation.
That would invalidate the plaintiff’s request for attorneys’ fees, predicated on the value they delivered to the company by canceling the compensation package.
