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Even if Tesla<\/a> Inc. shareholders vote later this week to ratify Chief Executive Officer Elon Musk\u2019s $56 billion pay package<\/a>, it\u2019s unlikely to reverse a judge\u2019s decision to nullify the 2018 compensation deal.<\/p>\n That\u2019s because the\u00a0June 13 vote<\/a>\u00a0has more symbolic weight than legal power. Shareholder approval may help Tesla with an appeal or a rehearing in a new case, but it cannot overturn Chancery Court Judge Kathaleen St. Jude McCormick\u2019s January ruling, some legal scholars say.\u00a0<\/p>\n \u201cPeople think this is like a direct democracy \u2014 that if they vote yes to re-ratify Elon\u2019s pay plan that it will fix what Chancellor McCormick<\/a> did,\u201d said\u00a0Christina Sautter<\/a>, a law professor at Southern Methodist University in Dallas. \u201cBut this is unprecedented.\u201d<\/p>\n Tesla called the vote as part of an unusual legal strategy. It\u2019s seeking a redo to correct flaws in the process when shareholders approved Musk\u2019s pay six years ago. In her ruling, McCormick pointed to director conflicts of interest and the company\u2019s failure to properly disclose terms of his executive compensation plan.<\/p>\n The carmaker is banking on the Delaware Supreme Court, which will hear any appeal of McCormick\u2019s ruling, taking a favorable view of investors re-ratifying the deal. However, Tesla alluded in its\u00a0proxy<\/a>\u00a0to the fact that it can\u2019t guarantee a successful outcome.<\/p>\n We \u201ccannot predict with certainty how a vote to ratify Musk\u2019s compensation would be treated under Delaware law in these novel circumstances,\u201d the company wrote.<\/p>\n Win or lose, Musk and Tesla cannot file an appeal until McCormick decides the legal fees in the case and issues a final judgment.\u00a0<\/p>\n The more clear-cut and immediate impact of the vote on Musk\u2019s pay is that it could strengthen or weaken the billionaire\u2019s influence<\/a> on the company. As of June 7, Tesla\u2019s shares have fallen 29% this year amid growing competition for electric vehicles and slowing sales, and the vote is widely seen as a referendum on his leadership.<\/p>\n Glass Lewis & Co. and Institutional Shareholder Services, two prominent proxy advisers, recommended that shareholders reject the pay package. ISS\u00a0called it<\/a>\u00a0\u201coutsized from the start\u201d and said it has failed to meet some of the board\u2019s stated objectives.\u00a0<\/p>\n The award is seen as a way to maintain Musk\u2019s focus on Tesla. Since 2018, he has sold Tesla shares to purchase X, formerly known as Twitter<\/a>, and started xAI, so he now\u00a0oversees six companies<\/a>. He\u2019s threatened to create more AI products outside of the carmaker if he can\u2019t build his equity position in Tesla back up to 25%, from about 13% now.<\/p>\n \u201cWhat we recognized in 2018 and continue to recognize today is that one thing Elon most certainly does not have is unlimited time,\u201d Board Chair Robyn Denholm wrote\u00a0in a letter to shareholders<\/a>\u00a0last week. \u201cNor does he face any shortage of ideas and other places he can make an incredible difference in the world. We want those ideas, that energy and that time to be at Tesla, for the benefit of you, our owners. But that requires reciprocal respect.\u201d<\/p>\n Denholm\u00a0has been courting<\/a>\u00a0large institutional investors in the days before the vote. Tesla has also dangled an exclusive factory tour with Musk as a\u00a0potential prize<\/a>\u00a0for shareholders who can prove they\u2019ve cast a ballot.<\/p>\n Zohar Goshen<\/a>, a Columbia Law School professor who specializes in corporate law issues, said launching a redo of the approval process for Musk\u2019s pay is a proper way to rectify the flaws McCormick identified while still keeping the billionaire tied to Tesla.<\/p>\n \u201cThe court\u2019s finding that Tesla failed to properly approve the compensation package in 2018 doesn\u2019t mean that Musk isn\u2019t entitled to any compensation for the last six years of service,\u201d Goshen\u00a0wrote<\/a>\u00a0in an op-ed on Bloomberg Law.<\/p>\n\nMusk\u2019s Focus<\/h3>\n