Tesla and its CEO Elon Musk have said they will appeal the decision to rescind his $56 billion pay package, as a Delaware Judge ruled last month that the payday was too lucrative and not in the best interest of investors after a shareholder opposed it.
Tesla and Musk will ask Delaware Chancery Court Judge Kathaleen McCormick to pause her ruling, which eliminated the CEO’s possibility of collecting a $56 billion pay package that rewarded him for reaching various tranches that pushed for company growth.
A letter from the attorney representing the shareholder who opposed Musk’s pay package on Tuesday states that Tesla and Musk will appeal the ruling. Musk has been openly critical of Delaware’s handling of the situation, threatening to move Tesla’s state of incorporation to Texas, where its headquarters is located.
Greg Varallo, the attorney representing the shareholder, said they hope to reach a deal on an appeal bond and would agree to a stay in the case. An appeal bond ensures the losing party will pay if the defendant fails to overturn the decision in a case.
The court filing that showed Musk’s intention to appeal the decision said that the Tesla CEO and the shareholder would tell the court their position on fees by March 1.
Reuters initially reported on the intention of appeal from Musk and Tesla.
Musk will have sixty days to file an appeal with the Delaware Supreme Court if Judge McCormick approves the fee and final order.
Shareholders overwhelmingly supported the pay package when it was voted on in 2018. However, Judge McCormick said in her over 200-page ruling that rescinded the payday for Musk that shareholders were not properly informed, and Musk controlled the negotiations.
McCormick said in the ruling:
“With a $55.8 billion maximum value and $2.6 billion grant date fair value, the plan is the largest potential compensation opportunity ever observed in public markets by multiple orders of magnitude—250 times larger than the contemporaneous median peer compensation plan and over 33 times larger than the plan’s closest comparison, which was Musk’s prior compensation plan.”
She then decided in the favor of Richard Tornetta, who brought on the suit.
Musk was immediately critical of the decision, warning others to “never incorporate your company in the state of Delaware.”
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