Tesla shareholder seeks to bar Musk from dodging from Delaware pay ruling

Tesla shareholder seeks to bar Musk from dodging from Delaware pay ruling

By Tom Hals and Jody Godoy

WILMINGTON, Del. (Reuters) – A Tesla investor who successfully won the cancellation of CEO Elon Musk’s $56 billion salary asked a Delaware judge on Wednesday to stop the electric car maker from violating the authority of the court by moving his legal domicile to Texas.

Richard Tornetta’s legal team has asked Delaware Chancellor Kathaleen McCormick to rule on his request before Tesla’s June 13 annual meeting, where shareholders will vote on Texas reincorporation and approve Tesla’s pay package. Musk for 2018.

“Defendants cannot now seek to flee this jurisdiction and undo years of litigation because they are dissatisfied with the outcome,” the plaintiff’s legal team said in a filing.

Tesla has been incorporated in Delaware for 21 years and has required shareholders to file suit in that state, the filing says.

Musk and Tesla did not immediately respond to requests for comment.

In January, McCormick canceled the wage plan, which Tesla estimated to be worth $56 billion, calling it “unfathomable.”

The judge found that the stock option deal was negotiated by a board that lacked independence from Musk and that the company hid key details from shareholders before approving it at a meeting. a vote in 2018.

Musk criticized Delaware and its courts following the ruling and said the state, home to the majority of large publicly traded companies, was trying to prevent companies from leaving.

The compensation package granted stock options for about 304 million shares if Tesla achieved multiple milestones, which it did. Musk did not exercise stock options, which allow him to buy Tesla stock at a deep discount.

Tornetta’s legal team also asked the court on Wednesday to seize the stock options as an additional measure to prevent Tesla and Musk from avoiding the January ruling.

To try to restore the pay package, Tesla resorted to an obscure legal maneuver by asking shareholders to “ratify” Musk’s salary for 2018. This could keep Musk motivated and potentially give Tesla an argument against the $6 billion of attorney fees sought by Tornetta’s attorneys, the company said.

The shareholder request comes a day after Tesla forecast higher sales this year and unveiled plans to roll out more affordable models in early 2025. That eased concerns about slowing growth and shares rose. jumped more than 10% on Wednesday at the start of the session.

(Reporting by Tom Hals in Wilmington, Delaware)

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