With the ratification of Elon Musk’s 2018 CEO Performance Award successfully completed at the 2024 Annual Stockholders’ Meeting, Tesla has started its efforts to urge Delaware Judge Chancellor Kathaleen McCormick to reconsider her decision surrounding Musk’s compensation plan.
Tesla’s efforts were outlined in a letter that the electric vehicle maker’s legal team filed on Friday. An appendix which includes the results of the votes surrounding the proposals at the 2024 Annual Stockholders Meeting was also included by the company. As per the letter, Elon Musk’s 2018 pay plan and Tesla’s redomestication to Texas have been approved by TSLA shareholders.
Tesla’s legal team noted that the results of the TSLA shareholders’ vote have a significant impact on the claims and issues in the case brought forward by stockholder Richard Tornetta, who held nine shares when he filed the case against Musk’s pay package. Tornetta’s legal team is looking to get paid over 27 million TSLA shares, worth over $5 billion, for their efforts in the case.
“Following the fully informed Ratification vote, which embodies the will and sound business judgment of Tesla’s stockholders, the Ratification is now effective. As previously noted in our letters to Your Honor on April 17 and April 25, 2024, and in Tesla’s May 7, 2024 Consolidated Opposition to the Three Motions, the approval of Ratification by Tesla’s stockholders significantly impacts the claims and issues in this action, including the Court’s final judgment, Plaintiff’s Fee Petition, and the timing and topics to be covered in connection with the hearing on the Fee Petition and judgment currently scheduled for July 8, 2024.
“Consequently, Tesla respectfully suggests that the parties meet and confer on a proposed path forward, including a potential revised schedule (subject to approval by the Court) to permit the parties to detail their respective positions. We conferred with counsel for the individual defendants, and they join in this request,” Tesla’s legal team wrote in their letter.
When Chancellor McCormick rescinded Elon Musk’s 2018 CEO Performance Award back in January, she alleged that the CEO had controlled the process that led to the approval of the high-risk, high-reward payment plan. The judge also noted that Tesla concealed crucial information from TSLA shareholders about the ease of the targets in Musk’s 2018 compensation plan, which called for Tesla to grow its market cap over tenfold, among other metrics. Each target in Musk’s 2018 pay plan has already been achieved.
The letter from Tesla’s legal team (via Plainsite) can be viewed below.
gov.uscourts.delch.2018-0408-KSJM.377.0 by Simon Alvarez on Scribd
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