Tesla and Elon Musk are seizing upon an obscure provision in corporate law to attempt to restore Musk's $56 billion pay package, in an untested move that...
- Tesla and Elon Musk are seizing upon an obscure provision in corporate law to attempt to restore Musk's $56 billion pay package, in an untested move that could again mire the company in litigation, legal experts said.
Tesla called the approach "novel" in its securities filing and said the special board committee that approved it could not predict how it would be treated under Delaware law.Eric Talley, a professor at Columbia Law School, said the provision is meant to be a "Band-Aid" for technical boardroom mistakes, not to undo major court rulings.
Tesla proposed to fix that in two ways. In an attempt to remove board conflicts, it had an independent director, Kathleen Wilson-Thompson, review the 2018 pay deal to decide if it was in the best interest of shareholders. Ann Lipton, a corporate law professor at Tulane University, said it is unclear Tesla if can now pay Musk not for achieving future milestones, but for past performance. She said it could be considered a waste of corporate assets.
Delaware law experts said they were unaware of precedents for overcoming a court ruling by using a shareholder vote in this way.
Delaware Law Tesla Shares Tesla Shareholder Vote Delaware Corporate Law Eric Talley Pay
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