A group of Tesla Inc. TSLA shareholders, including Cathie Wood‘s Ark Investment Management LLC, are reportedly appealing the Delaware Chancery court’s decision to block Elon Musk‘s $56 billion pay package at the EV company.
What Happened: Florida shareholders Ark Ivestment Management LLC, David Israel, and Kurt Panouses filed a notice of appeal in the Supreme Court of Delaware last month over Delaware Chancery Court Judge Kathaleen St. J. McCormick’s decision to void Musk’s pay package, according to a report by Bloomberg.
McCormick in January 2024 voided Musk’s $56 billion pay package alleging that Tesla’s board was influenced by the CEO when they adopted the plan in 2018. Tesla shareholders subsequently voted again to reinstate the package in June. However, McCormick again ruled against the package in December.
Tesla said in a post on X in December that the company deems the ruling to be wrong and intends to appeal to the Delaware Supreme Court.
Musk Responds: “Awesome,” Musk said on social media platform X about the appeal by the Florida shareholders. “The original lawsuit was brought by a law firm using a puppet shareholder. The appeal is by real Tesla shareholders.”
Musk was referring to minor shareholder Richard Tornetta as a “puppet shareholder.” Tornetta filed the lawsuit that led to the CEO’s compensation package being rescinded.
Musk in June said that the lawsuit brought forth by Tornetta does not represent Tesla shareholders as it claims to.
“A “class action” lawsuit, by definition, should represent the class, yet this one, and most others, do NOT, serving simply to enrich law firms at the expense of the people they falsely claim to represent,” Musk said.
“The law should be changed to require at least 10% of the members of the supposed class to vote in favor of a class action suit. If they can’t even muster 10%, it is obviously bogus,” the CEO added.
Over 70% of Tesla shareholders voted to approve Musk’s pay package in 2018 and again in June 2024.
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Photo courtesy: Ark Invest
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