By Tom Hals and Jonathan Stempel
WILMINGTON, Delaware (Reuters) -A Delaware decide dominated on Monday that Tesla CEO Elon Musk nonetheless just isn’t entitled to obtain a $56 billion compensation package deal regardless of shareholders of the electrical car firm voting to reinstate it.
The ruling by the decide, Chancellor Kathaleen McCormick of the Courtroom of Chancery, follows her January determination that known as the pay package deal extreme and rescinded it, shocking buyers, and solid uncertainty over Musk’s future on the world’s Most worthy carmaker.
Musk didn’t instantly reply to an emailed request for remark.
Tesla has stated in courtroom filings that the decide ought to acknowledge a subsequent June vote by its shareholders in favor of the pay package deal for Musk, the corporate’s driving power who’s accountable for a lot of its advances, and reinstate his compensation.
McCormick stated Tesla’s board was not entitled to hit “reset” to revive Musk’s pay package deal.
“Have been the courtroom to condone the observe of permitting defeated events to create new details for the aim of revising judgments, lawsuits would turn into interminable,” she stated in her 101-page opinion.
She additionally stated Tesla made a number of materials misstatements in its proxy assertion concerning the vote, and couldn’t declare the vote was a “cure-all” to justify restoring Musk’s pay.
“Taken collectively,” the issues with Tesla’s arguments “pack a strong punch,” she wrote.
Tesla shares fell 1.4% in after hours commerce, after the ruling.
McCormick additionally ordered Tesla to pay the attorneys who introduced the case $345 million, properly wanting the $6 billion they initially requested. She stated the charge might be paid in money or Tesla inventory.
“We’re happy with Chancellor McCormick’s ruling, which declined Tesla’s invitation to inject continued uncertainty into Courtroom proceedings,” stated an announcement from Bernstein Litowitz Berger & Grossmann, one of many three regulation corporations for the plaintiff.
The regulation agency additionally stated it seemed ahead to defending the courtroom’s opinion if Musk and Tesla appealed.
Musk and Tesla can enchantment to the Delaware Supreme Courtroom as quickly as McCormick enters a ultimate order, which may come as quickly as this week. The enchantment may take a yr to play out.
After the January ruling, Tesla shareholders flooded the courtroom with hundreds of letters arguing that rescinding Musk’s pay elevated the likelihood he would depart Tesla or develop some merchandise like synthetic intelligence at ventures aside from Tesla.
Attorneys for shareholder Richard Tornetta, who sued in 2018 to problem Musk’s compensation package deal, had argued that Delaware regulation doesn’t allow an organization to make use of a ratification vote to basically overturn the ruling from a trial.