Tesla has told the Delaware Supreme Court that Elon Musk’s $56 billion pay package should have been restored last year through a shareholder vote, as the company appeals a lower court ruling that rescinded the CEO’s record compensation.

Tesla’s attorney Jeffrey Wall argued on Wednesday that a vote by the company’s shareholders to reinstate Musk’s pay was “the most informed stockholder vote in Delaware history” and should be recognised to resolve the case. The hearing marks the final stage of one of the largest corporate legal battles in recent U.S. history.

The dispute follows a January 2024 ruling by Delaware’s Court of Chancery, which invalidated Musk’s 2018 compensation plan. Chancellor Kathaleen McCormick found that the Tesla board lacked independence from Musk and that shareholders did not have sufficient information when approving the package. Applying a strict legal standard, she deemed the pay unfair to investors.

Tesla is also appealing a separate ruling by the lower court that rejected the shareholders’ vote to restore the package as legally invalid. Current and former Tesla directors denied wrongdoing and argued that the Chancery Court misinterpreted both the facts and the law.

The case carries broader implications for Delaware corporate law and its Court of Chancery, historically a key venue for business disputes but recently criticised for being unfavourable toward influential entrepreneurs.

Musk did not attend the court session, which was held in a special courtroom accommodating around 65 attendees, mostly lawyers.

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