Billionaire entrepreneur Elon Musk on Saturday urged for a change in the law pertaining to class action lawsuits to mandate at least 10% of the class represented to vote in favor of it.
What Happened: Talking about the lawsuit that led to the revocation of his 2018 pay package, Musk said on Saturday that it doesn’t represent Tesla Inc. TSLA shareholders as it claims to.
“A “class action" lawsuit, by definition, should represent the class, yet this one, and most others, do NOT, serving simply to enrich law firms at the expense of the people they falsely claim to represent,” Musk said.
The lawsuit filed by minor Tesla shareholder Richard J Tornetta on behalf of Tesla stockholders in the Delaware Court of Chancery led to Musk’s 2018 compensation package being rescinded earlier this year. Musk is now engaged in a legal battle to have the compensation, valued at the time at $56 billion, reinstated.
“The law should be changed to require at least 10% of the members of the supposed class to vote in favor of a class action suit. If they can't even muster 10%, it is obviously bogus,” Musk said.
After the judge voided Musk’s package, the company’s board put the pay package up for shareholder vote yet again, the result of which was announced earlier this month at the company’s annual shareholder meeting. The proposal was passed after it received 72% of all votes cast, only marginally lower than the 73% it received in 2018.
Why It Matters: Musk on Saturday also slammed the attorneys behind the lawsuit in the Delaware Court of Chancery as “fraud” and “hypothetical parasites.”
Lawyers for Musk are now seeking to delay a hearing scheduled for July 8 on the award of billions of dollars in fees to the lawyers who challenged his pay package in light of the recent shareholder vote, Bloomberg reported. Tesla attornies reportedly said in a filing that the shareholder vote to re-approve the CEO’s package "impacts significantly what remains to be decided in this litigation."
A lawyer who countered the package, however, said in a filing on Friday that the new shareholder vote had “no legal effect after a post-trial judgment on the merits.”
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