By Tom Hals and Jody Godoy
WILMINGTON, Delaware (Reuters) – A Tesla investor who successfully sued to overturn CEO Elon Musk’s $56 billion pay package asked a Delaware judge on Wednesday to block the electric car maker from defying the authority to defy the court by moving its legal seat to Texas.
Richard Tornetta’s legal team has asked Delaware Chancellor Kathaleen McCormick to rule on his request before Tesla’s June 13 annual meeting, where shareholders will vote on reinstatement in Texas and approving Musk’s 2018 pay package.
“Defendants cannot now attempt to hide from this venue and undo years of litigation because they are dissatisfied with the outcome,” the plaintiff’s legal team said in a filing.
Tesla has been incorporated in Delaware for 21 years and has required shareholders to take legal action in that state, the filing said.
Musk and Tesla did not immediately respond to requests for comment.
In January, McCormick voided the pay package, which Tesla estimated was worth up to $56 billion, calling it “unfathomable.”
The judge found that the stock option agreement had been negotiated by a board that lacked independence from Musk and that the company had concealed key details from shareholders before they approved it in a vote in 2018.
Musk criticized Delaware and its courts after the ruling, saying the state, home to the majority of large publicly traded companies, was trying to prevent companies from fleeing.
The compensation package granted stock option awards for approximately 304 million shares if Tesla reached various milestones, which it did. Musk has not exercised the stock options that allow him to buy Tesla stock at a deep discount.
Tornetta’s legal team also asked the court on Wednesday to seize the stock options as another measure to prevent Tesla and Musk from escaping the January ruling.
To try to reinstate the pay package, Tesla used an obscure legal maneuver and asked shareholders to “ratify” Musk’s 2018 salary. This could motivate Musk and potentially give Tesla an argument against the $6 billion in legal fees that Tornetta’s lawyers have demanded, the company said.
The shareholder proposal comes a day after Tesla forecast rising sales this year and announced plans to introduce more affordable models in early 2025. That eased concerns about slower growth and shares rose more than 10% in early trading on Wednesday.
(Reporting by Tom Hals in Wilmington, Del.)