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Re-vote on Elon Musk's pay could expose Tesla to even more legal trouble
Yahoo Finance
Re-vote on Elon Musk’s pay could expose Tesla to even more legal trouble
Alexis Keenan • Reporter
Mon, Apr 22, 2024, 4:00 AM EDT • 5 min read
Tesla (TSLA) is likely in for some fresh legal entanglements after recommending stockholders vote to reinstate CEO Elon Musk’s multi-billion-dollar compensation package — no matter what the final tally reveals at the company's June annual meeting.
"I think regardless of whether the vote is approved or not, it's going to be challenged in the Delaware courts," said Marc Steinberg, a law professor at Southern Methodist University Dedman School of Law.
Because of the billions at stake, "chances are you're going to attract shareholder derivative and class-action type lawsuits," added Jerry Comizio, a business law professor at American University's Washington College of Law.
Musk's pay was struck down in January by a Delaware judge who found that Tesla's directors had breached their fiduciary duty when they awarded Musk the largest compensation opportunity ever granted to a public company executive. The ruling came after a shareholder sued to challenge the pay package.
Musk's incentive-based pay, had it not been invalidated by the Delaware court, would now be worth roughly $47 billion following a fall in the value of Tesla’s stock. At the time of the ruling it had been worth up to $56 billion.
{snip}
Re-vote on Elon Musk’s pay could expose Tesla to even more legal trouble
Alexis Keenan • Reporter
Mon, Apr 22, 2024, 4:00 AM EDT • 5 min read
Tesla (TSLA) is likely in for some fresh legal entanglements after recommending stockholders vote to reinstate CEO Elon Musk’s multi-billion-dollar compensation package — no matter what the final tally reveals at the company's June annual meeting.
"I think regardless of whether the vote is approved or not, it's going to be challenged in the Delaware courts," said Marc Steinberg, a law professor at Southern Methodist University Dedman School of Law.
Because of the billions at stake, "chances are you're going to attract shareholder derivative and class-action type lawsuits," added Jerry Comizio, a business law professor at American University's Washington College of Law.
Musk's pay was struck down in January by a Delaware judge who found that Tesla's directors had breached their fiduciary duty when they awarded Musk the largest compensation opportunity ever granted to a public company executive. The ruling came after a shareholder sued to challenge the pay package.
Musk's incentive-based pay, had it not been invalidated by the Delaware court, would now be worth roughly $47 billion following a fall in the value of Tesla’s stock. At the time of the ruling it had been worth up to $56 billion.
{snip}