Elon Musk's Tesla pay package is once again questioned by the judge who initially tossed it

Chancellor Kathaleen McCormick challenged Tesla's argument that a shareholder vote should reinstate Elon Musk's pay package after she invalidated it.

• A judge on Friday questioned the restoration of Elon Musk's multibillion-dollar Tesla pay package.
• Tesla's lawyers argue a shareholder vote approving the pay should be sufficient to reinstate it.
• The judge, who previously invalidated the pay package, said the issue "will not end here and now."

The Delaware judge who previously threw out Elon Musk's $55 billion Tesla pay package has cast new doubts on whether the CEO's massive benefits package should be reinstated despite approval from the company's shareholders.

Tesla lawyers on Friday argued the pay should be reinstated following a June shareholder vote approving it.

"Honoring the shoulder vote would affirm the strength of our corporate system," The Associated Press reported David Ross, an attorney for Musk, told Chancellor Kathaleen McCormick. "This was stockholder democracy working."

But McCormick wasn't immediately convinced. The judge said she'd take their arguments "under advisement" and that the issue "will not end here and now," The Wall Street Journal reported.

McCormick pointed out that there is no legal precedent that allows a post-trial vote to reverse an adjudicated decision that corporate officers had breached their fiduciary duties.

"This has never been done before," AP reported McCormick said.

In January, McCormick called the initial approval process of Musk's pay package "deeply flawed" and said Musk "had extensive ties with the persons tasked with negotiating on Tesla's behalf," which prompted her to invalidate the pay package.

The issue has been the subject of continued litigation stemming from a 2018 lawsuit filed by Tesla investor Richard Tornetta. Tornetta originally argued that Musk and the automaker failed to fulfill their fiduciary duties when Tesla awarded Musk a pay package "beyond the bounds of reasonable judgment."

Musk hasn't spoken at length about the ongoing legal battle, but in a post on his social media platform X following the January ruling wrote, "Never incorporate your company in the state of Delaware."

He began the process of relocating Tesla and SpaceX out of Delaware this year, filing to legally transition the businesses to Texas.

Lawyers for Musk and representatives for Tesla did not immediately respond to requests for comment from Business Insider.