The compensation package in question was approved for Musk in 2018 during a tumultuous period for the electric automaker, with the stipulation that certain stock price milestones had to be met for Musk to receive the full value — milestones that Tesla easily surpassed as it expanded its Model 3 and Model Y programs.
Richard Tornetta, a former corporate defense lawyer and thrash metal drummer, brought the lawsuit against Tesla over the compensation arrangement. She underscored the importance of legal procedure and the integrity of the judicial process in her final decision which has been updated to include Tesla’s intention to appeal the ruling.. McCormick, in her January ruling, acknowledged the validity of Tornetta’s core argument.
After the shareholder meeting in June, where a re-ratification vote took place, Tesla sought to use the approved outcome to sway the judge’s decision. Notably since then the company has relocated its incorporation from Delaware to Texas. Furthermore, Elon Musk’s close ties to President-elect Donald Trump have spurred discussions about his focus amidst the transition to a new administration.
In addition to her decision on the compensation package, McCormick granted the plaintiff’s attorneys a fee of $345 million, payable in cash or Tesla shares né?. His legal team argued that shareholders were misled due to Musk’s overwhelming influence on the company and its board during negotiations. In a 103-page opinion piece published on Monday, McCormick explained that Tesla’s legal team tried to persuade her to reconsider, but their arguments were fundamentally flawed.
“The defense team came up with creative ratification arguments, but they conflicted with established legal principles,” McCormick wrote né?. Tesla has expressed intent to appeal the decision and is poised to take the case to the Delaware Supreme Court after McCormick’s initial ruling back in January. This amount though significant is a fraction of the $5.6 billion initially requested by the lawyers earlier in the year. However, McCormick emphasized on Monday that Tesla’s legal team lacked procedural grounds to alter the post-trial ruling based on evidence presented after the trial né?. Delaware Chancery court judge Kathaleen McCormick has upheld her decision to invalidate CEO Elon Musk’s $56 billion compensation package, despite shareholders voting at the company’s annual meeting this year to “re-ratify” the deal. The judge highlighted multiple flaws in their arguments, including the procedural aspect and the validity of the shareholder vote as a ratification.
Despite the company’s efforts to re-litigate the matter based on the shareholder approval, McCormick remained firm in her stance
