Musk, Tesla shareholder seek stay of pay ruling during appeal
Elon Musk and the Tesla shareholder who won a verdict last month voiding the CEO's $56-billion pay package will ask a judge to pause her ruling until an appeal is resolved.
Appeal for Stay of Pay Ruling
Elon Musk and the shareholder who successfully challenged his $56-billion pay package are requesting a stay of the ruling. They plan to appeal the decision and want the ruling to be put on hold until the appeal is resolved.
The shareholder's attorney, Greg Varallo, stated that they will agree to a stay if they can reach a deal on an appeal bond. This is the first indication that Musk intends to appeal the ruling, which he has criticized on social media.
Musk has previously mentioned his intention to seek shareholder approval to move Tesla's state of incorporation to Texas, where the company is headquartered.
Final Order and Legal Fee
Before Musk can move forward with the appeal, both sides will propose a final order to be approved by the judge, Kathaleen McCormick. This order will also include a petition for a legal fee, which Tesla will be responsible for paying.
Given the substantial verdict, the legal fee is expected to be one of the largest in history. However, Tesla is likely to oppose it. Musk and the shareholder have until March 1 to state their position on the fees to the court.
If the fee is approved and the final order is granted, Musk will have 60 days to file an appeal with the Delaware Supreme Court. The entire appeals process is expected to take at least six months to resolve.
Background on the Ruling
The ruling, issued on January 30, nullified Musk's $56-billion pay package, which consisted of stock options. Although Musk has not exercised the options yet, the verdict required their return to Tesla.
The case was brought by shareholder Richard Tornetta, who pursued the legal action on behalf of Tesla. Shareholders will benefit from the return of the stock options.
Judge McCormick's ruling highlighted Musk's improper control over the pay negotiation process and the lack of information provided to shareholders when they voted to approve the package in 2018.
