Summary
- Shareholders ratified Elon Musk’s CEO Performance Award at the 2024 Cyber Roundup
- Legal team of a TSLA investor challenges the astronomical fee request of the lawyers of shareholder Richard Tornetta
- Tornetta’s lawyers argue they deserve over 29 million shares of TSLA for their services
- Steffens’ legal team also challenges the fee request and highlights the informed vote on Musk’s pay plan
- TSLA stockholder’s legal team urges the court to respect stockholders’ democracy and limit the role of the plaintiff
Article
The battle over Musk’s 2018 CEO Performance Award at Tesla continues in the Delaware Court, with a TSLA investor challenging the significant fee request of the lawyers representing shareholder Richard Tornetta who initially filed a legal complaint about Musk’s pay package when he owned just nine shares of the company. Tornetta’s legal team is seeking over 29 million shares of TSLA as compensation, equivalent to more than $5 billion at the time, which amounts to over $200,000 per hour for their services. Another Tesla shareholder, Amy Steffens, with over 19,000 shares, has secured her own legal team to challenge the fee request of Tornetta’s lawyers.
Following the ratification of Musk’s pay package at the 2024 Cyber Roundup, Tornetta’s legal team argued that the approval was invalid as shareholders were still considered “coerced” and “uninformed” during the process. They referred to the events leading up to the ratification as a “clown show.” Steffens’ legal team has since filed a joinder in the case and is pushing for a hearing to reconsider the Delaware Judge’s preliminary ruling. They argue that Tornetta’s complaint against the CEO Performance Award did not provide any tangible economic benefit to Tesla or its stockholders, and the shareholder vote on Musk’s pay plan was likely one of the most informed in Delaware’s corporate history.
Steffens’ legal team emphasized the informed nature of the ratification vote, stating that Tesla stockholders were well aware of the issues surrounding Musk’s pay package before voting. They noted that the ratification issue was extensively debated in various forums, and when the votes were tallied, a decisive 72% of disinterested voting shares favored ratification. The lawyers defended the legitimacy of stockholder democracy and argued that further litigation challenging the democratically determined result was unnecessary.
The legal team representing the longtime Tesla investor urged the court to respect the stockholders’ democracy and limit Tornetta’s ongoing role in the case, especially in light of the Ratification Vote. They suggested that the court should consider withdrawing Tornetta’s authority to act on behalf of the company, as the majority of well-informed, uncoerced stockholders had repudiated the relief obtained by the derivative plaintiff. Musk, in response to the efforts of the TSLA shareholder’s legal team, expressed his appreciation with a couple of “lit” emojis on a social media platform.
The ongoing legal battle over Musk’s 2018 CEO Performance Award at Tesla reflects the complexities surrounding executive compensation and shareholder activism in large corporations. The case highlights the importance of informed stockholder votes and the challenges of reconciling the interests of individual investors with those of company management. The Delaware Court’s decision on the fee request and the legitimacy of the ratification vote will have significant implications for corporate governance and shareholder rights at Tesla and potentially set a precedent for future cases involving executive pay packages.
Read the full article here
