DELAWARE (Reuters) – The Delaware judge who voided Elon Musk’s record Tesla pay package told the parties in the case that she felt assured by the electric vehicle maker that it would not use an upcoming shareholder vote to attack her ruling.
WHY IT’S IMPORTANT
The shareholder legal team who sued over Musk’s $56 billion pay package had asked Chancellor Kathaleen McCormick for orders to prevent their case from being undone in a Texas court.
The company’s shareholders vote next month to “ratify” the pay package that McCormick voided and to reincorporate Tesla in Texas.
CONTEXT
The legal team for the shareholder said in a court filing in April that Tesla and Musk might attempt to undo McCormick’s ruling in another jurisdiction, like Texas.
Tesla called that “rank speculation” in court papers and said Delaware would retain jurisdiction over the pay dispute, comments that McCormick took as an assurance that the company would not attempt to work around her previous ruling.
KEY QUOTE
“If I have interpreted the defendants’ position incorrectly, then defense counsel – as officers of the court – are duty-bound to correct it. In the meantime, the defendants’ statements give me great comfort,” McCormick said in her seven-page letter.
WHAT’S NEXT
Tesla shareholders vote on June 13 to decide if they still want Musk’s pay package and to reincorporate in Texas, where it has its headquarters, from Delaware, where the majority of large publicly traded companies have their legal home.
McCormick must decide if the shareholder’s legal team should get the $6 billion they requested from Tesla as a legal fee before Musk and Tesla can appeal. She has scheduled a hearing for July 8 on the legal fee.
THE RESPONSE
Greg Varallo, an attorney for shareholder Richard Tornetta, declined to comment.
Attorneys for the company did not immediately respond to a request for comment.
(Reporting by Peter Henderson; Editing by Stephen Coates)
