Judge who rescinded Musk pay package confident Tesla won’t contest ruling outside Delaware
Will Tesla Challenge Musk Pay Ruling?
Delaware Judge Chancellor Kathaleen McCormick expressed confidence that Tesla would not challenge her decision to rescind CEO Elon Musk's 2018 pay package in jurisdictions outside Delaware, despite concerns raised by TSLA shareholder Richard Tornetta's legal team. Tesla reassured that Delaware retains jurisdiction over the dispute, which McCormick found comforting. The issue may arise at Tesla’s 2024 Annual Stockholders’ Meeting, where the ratification of Musk’s compensation and potential reincorporation from Delaware to Texas will be voted on.
What did Chancellor Kathaleen McCormick mean when she stated she would be comforted by the defendants' statements unless corrected by their legal counsel?
Chancellor Kathaleen McCormick, in her statement, expressed that she would be reassured by the defendants' statements, which suggest that Tesla would not use its upcoming 2024 Annual Stockholders' Meeting as a way to challenge her decision to rescind CEO Elon Musk's 2018 pay package. This statement came after the legal team of TSLA shareholder Richard Tornetta raised concerns that Tesla and Musk might try to circumvent McCormick's ruling in another jurisdiction, such as Texas.
In essence, McCormick is stating that unless Tesla's legal counsel corrects her understanding of their position, she will take their statements as assurance that they will not attempt to work around her ruling regarding Musk's 2018 compensation plan. This indicates that McCormick trusts the legal counsel's professionalism and expects them to inform her if their intentions change or if she has misinterpreted their position in any way.
What specific concerns did Richard Tornetta's legal team express regarding Tesla potentially circumventing Chancellor Kathaleen McCormick's ruling?
Richard Tornetta's legal team expressed specific concerns that Tesla and its CEO, Elon Musk, might attempt to circumvent Chancellor Kathaleen McCormick's ruling by relocating Tesla’s legal jurisdiction from Delaware to Texas6. They feared that this move could potentially undo the legal proceedings and outcomes that had been established in Delaware. Tornetta's attorneys highlighted these concerns in a court filing, emphasizing the risk of Tesla seeking to avoid the implications of McCormick's decision, which had rescinded Musk's substantial 2018 compensation package. This apprehension was rooted in the possibility that Tesla could leverage another jurisdiction to challenge or undermine the Delaware court's ruling.