Tesla shareholders want Elon Musk to get his billions. What comes next?

But that doesn’t mean Musk instantly reaps the benefits of the pay package, which was first ratified by shareholders in 2018 and has been valued at up to $56 billion.

The plan gives Musk the ability to buy up to 304 million Tesla shares at a pre-set price of $23.34. Tesla shares haven’t traded below $100 apiece since August 2020.

In January, Delaware Chancery Court Kathaleen McCormick struck down the deal after a shareholder sued to block it, citing a “deeply flawed” approval process and Musk’s “extensive ties” to members of the board.

Tesla plans to appeal the ruling, using shareholders’ reapproval of the compensation deal as evidence that most investors believe Musk deserves that pay. However, the reapproval has no direct impact on the legal proceedings, and the judge could acknowledge it and stay their course or outright ignore it.

“It’s hard to say whether or not she would actually change her mind,” said Samantha Crispin, a partner and head of corporate law at Baker Botts, noting that the unusual circumstances make it difficult to predict a clear outcome. “[McCormick will] be thoughtful and take it into consideration. But it’s really a wildcard as to whether or not it’ll change the outcome.”

In regulatory filings, Tesla wrote that it “cannot predict with certainty” how a vote to ratify Musk’s compensation will be treated under Delaware law.

There’s also the matter of legal fees in the January case, which are still being discussed in court.

The lawyers for the plaintiff in the suit that blocked Musk’s pay have requested more than $5 billion as payment in the form of Tesla stock. That’s more than 17 times as large as the biggest fee in Delaware’s history. They argue that they worked on contingency for more than five years, meaning that a loss would have meant they earned nothing for their work.

“We recognize that the requested fee is unprecedented in terms of absolute size,” the plaintiff’s legal team wrote in court filings. “ [T]he size of the requested award is great because the value of the benefit to Tesla that Plaintiff’s Counsel achieved was massive.”

The shareholder’s legal team was made up of three law firms: Bernstein Litowitz Berger & Grossmann and Friedman Oster & Tejtel — both New York firms — and Delaware-based Andrews & Springer.

Musk has called their request “criminal.” Tesla’s lawyers have objected to that payment, writing in court filings that “importantly, undisputed market evidence confirms plaintiff achieved little to no discernible value for Tesla or its stockholders.”

McCormick will hear arguments on July 8. Once she decides on the legal fees, the judge will deliver a final ruling in the case. From there, assuming that she reinforces her earlier decision, Musk will have 30 days to appeal to the Delaware Supreme Court.

“That’s really the end of the line,” Crispin said, noting that Tesla’s board would have to renegotiate a new compensation agreement if the state’s highest court ruled against Tesla. Board chair Robyn Denholm told CNBC last week that a new plan that was “exactly the same type” as the previous deal would cost the company $25 billion in stock-based compensation.

And, if Tesla reincorporates in Texas, the board would still have to start from scratch, since its courts are obligated to honor the rulings of Delaware’s courts. The company would have to make a number of changes to the compensation plan, including ensuring that the conflicts of interest highlighted by McCormick are done away with.

The difference, Crispin says, is that Texas corporate case law around fiduciary duties would apply to a new package, not Delaware’s. The First State has run its Court of Chancery for more than 200 years and is a major hub for corporations, lured by its friendly tax and incorporation laws.

Texas first approved new business courts last June and they won’t officially open until September. Texas Governor Greg Abbot this week appointed several new judges to the business court, including in Austin, where Tesla is headquartered.

Abbot on Tuesday also appointed three conservative justices to a new court of appeals, which will oversee the business court as part of its duties. Although the appeals court will eventually be made up of five judges, each winning their seat in statewide elections, Abbot’s picks will lead it for the first three years.