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Tesla Moves to Stymie Shareholder Lawsuits After Musk Pay Saga

On May 15, 2025, Tesla updated its corporate bylaws to mandate that investors must hold a minimum of 3% of the company’s outstanding shares before they can initiate derivative lawsuits.
This change follows Tesla's 2024 relocation from Delaware to Texas after a Delaware judge voided Elon Musk's record $56 billion compensation package.
The litigation began in 2018 when shareholder Richard Tornetta, who owned nine shares, challenged Musk's pay, alleging inadequate disclosures and conflicts of interest on Tesla's board.
Judge Kathaleen McCormick of the Delaware Chancery Court determined that Musk exercised excessive control over the process and that the board functioned more like a consultative group, which supported the lawsuit's findings.
Tesla's bylaw amendment effectively raises legal barriers for most shareholders and reflects a strategic move using Texas law to limit future lawsuits.

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Sueddeutsche Zeitung

Lean Left

Elon Musk: $100 Billion Stock Package in Danger

A small shareholder may bring Tesla's boss Elon Musk over a share package with which he should be paid. Musk reacts and tightens the conditions under which future lawsuits are possible.

6 days ago·Munich, Germany

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Zeit Online

Lean Left

US Car Manufacturer: Tesla Limits Legal Possibilities of Small Shareholders

A small shareholder with nine Tesla shares has ensured that there has been a dispute over a compensation package for Elon Musk for years. This is not to be possible in the future.

7 days ago·Germany

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The Daily Gazette

+2 Reposted by 2 other sources

Center

Tesla moves to stymie shareholder lawsuits after Musk pay saga

Tesla Inc. took a step to prevent future shareholder lawsuits like the one that blocked a record-setting pay package for Chief Executive Officer Elon Musk. The automaker late Friday disclosed changes to its corporate bylaws that will require investors to…

8 days ago

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CNBC

+3 Reposted by 3 other sources

Center

Tesla limits investors' ability to sue over breach of fiduciary duties

Tesla announced a change to its corporate bylaws that will limit shareholders ability to sue the company.

8 days ago·United States

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Tekedia

Tesla Moves to Limit Shareholder Lawsuits with New Corporate Bylaw After Texas Incorporation

Tesla has adopted a new corporate bylaw that significantly restricts shareholders’ ability to sue company leadership for breaches of fiduciary duty, marking a consequential shift in its legal governance following its reincorporation in Texas. The amendment, disclosed in a regulatory filing on Friday, introduces a 3 percent ownership threshold for initiating or maintaining derivative proceedings—lawsuits […] The post Tesla Moves to Limit Sharehol…

5 days ago

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dev.by

Now Any Tesla Employee Can Sue Musk — if They Have $30 Billion in Shares

The company has changed its corporate rules to prevent future shareholder lawsuits like the one that blocked CEO Elon Musk's record compensation package.

6 days ago

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