Tesla is arguing in a court filing that CEO Elon Musk won the legal battle over his $56 billion pay package because shareholders voted to reapprove the compensation after a Delaware judge voided 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 originally approved in 2018.
The attorneys for shareholder Richard Tornetta, who sued to invalidate the pay package, previously asked for 29 million shares of Tesla stock – an amount worth over $5 billion – as the legal fee. In a filing on 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 Chancery, although they characterized that amount as "unfairly low.
McCormick will hear oral arguments regarding the legal fee on July 8 and may take a few weeks before issuing a ruling on the matter. Even if McCormick doesn't reverse her ruling that voided the pay package in January, she may recognize that the shareholder vote to reinstate it showed there was little value in winning the case because Tesla shareholders want Musk to receive the record-breaking compensation.
That would undermine the plaintiff's attorneys' fee request, which is based on the value they provided to the company by getting the pay package rescinded. Musk's pay package, which consists of performance-based targets that trigger stock option awards that he must hold for a period of five years before exercising, was valued at $56 billion at the time the last target was achieved, according to Tesla.