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Musk got his paycheck through shareholder vote, Tesla claims in court filing

Tesla argues in a court filing that CEO Elon Musk He won the legal battle over his $56 billion compensation plan because shareholders voted to reapprove the compensation after a Delaware judge struck down the compensation plan earlier this year.

The filing, which was made public Thursday, comes about two weeks after Tesla Shareholders voted to approve Musk’s compensation plan, which was initially approved in 2018.

Delaware Chancery Court Chancellor Kathaleen McCormick struck down the compensation plan in January after finding that Musk’s close relationships with some board members influenced negotiations and that the company failed to adequately explain to shareholders that Tesla was on track to meet many of the plan’s performance targets.

Tesla filed a motion asking the judge to issue a final order in favor of the defendants. The company also sought to reduce the amount of legal fees that the shareholder’s attorneys who filed the lawsuit will receive to as low as $13.6 million.

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Lawyers for shareholder Richard Tornetta, who sued to invalidate the compensation plan, had previously sought 29 million Tesla shares — worth more than $5 billion — in legal fees.

In a filing Friday, they said Tesla could pay them $1.1 billion as an alternative, which they said would be based on precedent in the Delaware Court of Chanceryalthough they called this amount “unfairly low”.

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TSLA TESLA INC. 197.42 +1.05 +0.53%

The judge on Thursday ordered both sides to begin preparing briefs outlining their views on the impact of the shareholder vote on the case. She also asked them to agree on a date at the end of July or beginning of August for pleadings On the question.

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McCormick will hear oral arguments on legal fees on July 8 and could take several weeks to issue a decision on the issue.

Even if McCormick doesn’t reverse her decision that canceled the pay package in January, she could acknowledge that the shareholder vote to reinstate it showed there was little point in winning the case, because Tesla shareholders want Musk receive it record remuneration.

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This would harm the plaintiff’s claim for attorneys’ fees, which is based on the value he brought to the company by obtaining the wage cancellation.

According to Tesla, Musk’s salary, which consists of performance-based goals that trigger stock option grants that he must hold for a period of five years before exercising them, was valued at $56 billion at moment when the last objective has been achieved. The value of the salary fluctuates with changes in Tesla’s stock price, which has fallen more than 20% since the start of the year.

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Reuters contributed to this report.

News Source : www.foxbusiness.com
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