DOVER, Del. – A Delaware judge has reaffirmed her decision that Tesla must revoke Elon Musk’s multi-billion dollar pay package.

Chancellor Kathaleen St. Jude McCormick on Monday rejected a request from lawyers to the corporate boards of Musk and Tesla to overturn their ruling earlier this year that the company must rescind the unprecedented pay package.

McCormick also rejected an equally unprecedented and massive fee request from plaintiffs’ lawyers, who argued that they were entitled to legal fees in the form of more than $5 billion worth of Tesla stock. The judge said the lawyers were entitled to a fee of $345 million.

The rulings came as part of a lawsuit filed by a Tesla shareholder who challenged Musk’s 2018 compensation package.

McCormick concluded in January that Musk put together the landmark pay package in sham negotiations with non-independent directors. The compensation package originally had a potential maximum value of around $56 billion, but that amount has fluctuated over the years depending on Tesla’s stock price.

After the original court ruling, Tesla shareholders met in June and approved Musk’s 2018 pay package a second time, again by an overwhelming majority.

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Defense attorneys then argued that the second vote made clear that Tesla shareholders, with full knowledge of the flaws in the 2018 trial highlighted by McCormick, firmly believed that Musk was entitled to the pay package. They asked the judge to overturn her order ordering Tesla to cancel the pay package.

McCormick, who was skeptical of the defense’s arguments during a hearing in August, said in Monday’s decision that those arguments were completely flawed.

“The large and talented group of defense contractors got creative with the ratification argument, but their unprecedented theories contradict several strands of existing law,” McCormick wrote in a 103-page opinion.

The judge found, among other things, that a shareholder vote alone cannot approve a transaction with a conflict between responsible parties.

“Even if a shareholder vote could have a ratifying effect, it could not do so here due to several material misstatements in the proxy statement,” she added.

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Musk expressed his disagreement with the ruling in a post on X, the social media platform he runs. “Shareholders should control corporate votes, not judges,” he wrote.

Meanwhile, McCormick concluded that the $5.6 billion fee sought by the shareholder’s lawyers, which was once nearly $7 billion based on Tesla’s trading price, went too far.

“In a case about excessive compensation, this was a bold claim,” McCormick wrote.

Lawyers for the Tesla shareholder argue that their work resulted in the “massive” benefit of returning shares to Tesla that would otherwise have gone to Musk, and diluted shares held by other Tesla investors. They estimate that benefit at $51.4 billion, using the difference between the stock price at the time of the McCormick ruling in January and the exercise price of about 304 million stock options granted to Musk.

While the judge concluded that the methodology used to calculate the fee request was sound, he noted that the Delaware Supreme Court has found that fee award guidelines “must yield to the larger policy concern of avoiding windfalls for attorneys “.

“Fee awarding here needs to give in this way because $5.6 billion is a windfall no matter what methodology is used to justify it,” McCormick wrote. A fee of $345 million was “an appropriate sum to reward an overall victory.”

The fees awarded amount to almost exactly half of the current record $688 million in legal fees awarded in 2008 in litigation related to the collapse of Enron.