By Tom Halls
WILMINGTON, Delaware (Reuters) – Tesla began its fight to legally recognize shareholder votes in favor of Elon Musk’s record compensation, according to a letter made public on Monday.
Tesla wrote to CEO Kathleen McCormick that the parties in the pay package case should present legal explanations for Musk’s pay confirmation on Thursday, instead of continuing the case on an earlier schedule.
“The approval of Tesla’s shareholders’ consent materially affects the claims and issues in this action, including the court’s final judgment,” Tesla attorneys told McCormick in a letter filed Friday in Chancery Court.
Greg Varallo, a lawyer for the shareholder in the suit against the pay package, said the approval had “no legal effect” on the case and that he would explain his case in a brief argument due Friday.
Tesla said the approval process is “novel” and it’s unclear whether McCormick and the Delaware Supreme Court will accept the decision.
Tesla argued that the approval now cured the problems raised in McCormick’s ruling in January.
The judge found that Musk controlled the 2018 process that led to the pay package and that Tesla withheld key information from shareholders about the ease of targets the company had to meet in order to pay Musk.
A special committee of its board reviewed the pay package and decided it was in the best interest of shareholders, which Tesla said fixed the issue of Musk’s dominance in the process.
The vote was fixed by providing shareholders with hundreds of pages of additional disclosures, including McCormick’s 200-page opinion.
Before Tesla can appeal its ruling to the Delaware Supreme Court, McCormick must determine the fee for the shareholder’s legal team.
The shareholder’s lawyers are seeking about $5 billion in legal fees in the form of Tesla shares and Tesla has argued that they should be awarded about $13.6 million.
(Reporting by Tom Halls in Wilmington, Delaware; Editing by Franklin Paul)
