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The judge assured that Tesla will not challenge Musk’s pay ruling outside Delaware

DELWARE (Reuters) – The Delaware judge who overturned Elon Musk’s Tesla pay package told parties in the case that she felt assured by the electric vehicle maker that it would not use an upcoming shareholder vote to challenge its ruling traps.

WHY IT’S IMPORTANT

The shareholder legal team suing over Musk’s $56 billion pay package had asked Chancellor Kathaleen McCormick for injunctions to prevent their case from being overturned by a Texas court.

The company’s shareholders will vote next month to “ratify” the pay package that McCormick declared null and void and to reincorporate Tesla into Texas.

CONTEXT

The shareholder’s legal team said in a court filing in April that Tesla and Musk could seek to overturn McCormick’s ruling in another jurisdiction, such as Texas.

Tesla called that “speculation” in the court papers and said Delaware would retain jurisdiction over the pay dispute, comments that McCormick took as an assurance that the company would not try to circumvent its earlier ruling.

IMPORTANT QUOTE

“If I have misinterpreted the defendants’ position, the defense – as officers of the court – is obliged to correct this. In the meantime, the defendants’ statements provide me with great comfort,” McCormick said in her seven-page letter.

WHAT’S NEXT

Tesla shareholders will vote on June 13 to decide whether they still want Musk’s pay package and whether to re-establish itself in Texas, where it is headquartered, from Delaware, where the majority of major publicly traded companies make their legal home has.

McCormick must decide whether the shareholder’s legal team should receive the $6 billion they sought from Tesla in legal compensation before Musk and Tesla can appeal. She has a hearing scheduled for July 8 on legal fees.

THE ANSWER

Greg Varallo, attorney for shareholder Richard Tornetta, declined to comment.

Lawyers for the company did not immediately respond to a request for comment.

(Reporting by Peter Henderson; Editing by Stephen Coates)

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