Tesla CEO Elon Musk, alongside a Tesla shareholder who recently won a case nullifying his $56-billion compensation plan, plans to request a court to halt the implementation of the judge’s decision pending an appeal. This move was disclosed in a letter to the court from the shareholder’s lawyer on Tuesday.
Greg Varallo, representing the shareholder, informed Reuters that both parties would consent to a stay of the ruling if they could agree on the terms of an appeal bond. This development marks the first sign of Musk’s intention to challenge the verdict, a decision he has openly criticized on social media platforms. Musk has also expressed intentions to seek approval for relocating Tesla’s state of incorporation to Texas, aligning with the company’s headquarters.
Yesterday, Musk shared that SpaceX has already moved its incorporation from Delaware to Texas.
Before proceeding with the appeal, both parties are expected to submit a final order for Judge Kathaleen McCormick’s approval, which will include a request for legal fees. Given the significant nature of the verdict, the legal fee, to be covered by Tesla, is anticipated to be one of the largest on record, although it is expected to face opposition from Tesla.
The court has been informed that Musk and the shareholder will present their stance on the legal fees by March 1. Following Judge McCormick’s approval of the fees and the final order, Musk will have a 60-day window to file an appeal with the Delaware Supreme Court, a process that is projected to extend over at least six months.
An appeal bond, aimed at safeguarding the plaintiff’s interests by ensuring the losing party fulfills the payment obligations if the appeal fails, is part of the discussions. The January 30 ruling overturned Musk’s substantial pay package, awarded in stock options, which Musk has yet to exercise. These options would allow him to purchase Tesla stock at a significantly reduced price, with a stipulation to retain the stock for a five-year period.
The lawsuit was initiated by shareholder Richard Tornetta, acting on Tesla’s behalf, leading to a beneficial outcome for shareholders through the retraction of the stock options to Tesla. In her decision, Judge McCormick highlighted that Musk had unduly influenced the compensation negotiation process and that shareholders were inadequately informed when they voted to approve the package in 2018.
