Tesla (TSLA.US) appeals to the Delaware Supreme Court to push for the restoration of Musk's $56 billion salary

The Zhitong Finance App learned that Tesla (TSLA.US) lawyers filed a lawsuit in the Delaware Supreme Court to restore Elon Musk's salary plan worth 56 billion US dollars. The plan was previously annulled by a lower court in January 2024.

The lawyers' team argues that the remuneration agreement was approved by shareholders, and that this vote was one of the most transparent votes in Delaware's history, fully demonstrating shareholders' support for the plan.

According to reports, Tesla attorney Jefey Wallfr told the judge: “This is the most transparent shareholder vote in Delaware's history. Confirming this will resolve the dispute in this case.” He believes that the shareholders' voting results should be the decisive basis for this case.

However, the counterparty's lawyer objected, saying that if decided according to this, it could set a precedent for endless lawsuits.

Although Musk did not attend the hearing, if the original plan remains invalid, he can still obtain tens of billions of dollars in compensation through an alternative 25 billion US dollar plan.

Tesla claims that the introduction of an alternative compensation plan is aimed at retaining Musk and making it focus on driving the company's transformation into the field of robotics and autonomous driving. At the beginning of this year, Musk revealed that he was preparing to form a new US political party. Currently, Tesla has moved its place of registration to Texas, and it is far more difficult for shareholders in this state to challenge the board's decisions than Delaware.

Additionally, the judgment in this case may have a significant impact on Delaware Corporation Law and its Court of Equity. The court was previously disputed for allegedly not being able to fully support entrepreneurs.

The Equity Court's ruling rejecting Musk's pay has become a strong basis for criticizing Delaware people. Judge Kathaleen McCormick ruled that Tesla's board of directors lacked independence from Musk when approving the compensation plan in 2018, and that shareholders failed to grasp key information when they overwhelmingly passed the plan that year. As a result, she applied strict legal standards and determined that the pay was unfair to investors.

Since this year, Tesla's stock price has accumulated an increase of about 8%, while the S&P 500 index rose by about 14% during the same period.