A legal scholar critiqued Elon Musk’s pay. Now he’s out of a job

Last week, Charles Elson was preparing to file a legal brief criticizing a coming shareholder vote on a $46 billion pay package for Musk. That is when he got an email from the head of litigation at Holland & Knight, the law firm that has long handled Elson’s work as an expert witness.

It said that Tesla’s general counsel had called a partner at the firm and “advised that our relationship with Tesla is about to be terminated on account of actions you are taking," the email, which was reviewed by The Wall Street Journal, said.

After speaking with the firm—which represents Tesla on separate matters—Elson resigned from his consulting role. He filed his legal brief on Monday.

“I was shocked by the whole thing," Elson said, likening the tactic to threatening a witness. “But if you have to choose between your job and your integrity, you choose your integrity every time."

A spokesman for Holland & Knight said the firm determined Elson’s course of action was inconsistent with its obligations to its client, and that its determination wasn’t based on coercion or threats from anyone.

“Tesla categorically rejects the Amicus Motion’s suggestion that it is ‘appalling’ or ‘bullying’ to raise a potential conflict issue with outside counsel, or for outside counsel to insist that their lawyers—consultants or otherwise—comply with their ethical and fiduciary responsibilities," Tesla said in a letter to the judge responding to Elson’s brief.

People familiar with Tesla and the law firm’s thinking said Tesla raised concerns about Elson’s brief to the firm, but didn’t threaten to end the business relationship. One person said the impression that Tesla threatened the firm was the result of an unspecified miscommunication within Holland & Knight.

Elson’s break with the law firm comes just weeks before Tesla shareholders are set to vote on whether to reinstate stock options for Musk. A judge struck down the compensation in January, saying it was granted by a Musk-controlled board and that shareholders weren’t given crucial information.

In her decision, Delaware Chancellor Kathaleen McCormick cited an earlier brief Elson had filed opposing Musk’s pay package. That 2023 brief argued that Musk’s existing 22% stake before the award already tethered Musk’s interests to shareholders. It noted other big-name executives, such as Amazon.com’s Jeff Bezos and Meta’s Mark Zuckerberg, who haven’t received equity awards.“The massive grant was unnecessary to incentivize Musk or align his interests with those of Tesla’s public stockholders. And it has ushered in a new era of outsized awards for other executives," Elson wrote. “The award was unfair."

McCormick cited the brief multiple times in her decision, calling it “persuasive." She had plenty of reasons to consider Elson’s opinion.

The bowtie-wearing 64-year-old serves as the executive editor at large for Directors & Boards Magazine. He is the vice chairman of the American Bar Association’s Committee on Corporate Governance. Elson founded the Weinberg Center for Corporate Governance at the University of Delaware, where he retired from teaching two years ago. He sits on two boards himself, and previously served on several more.

Holland & Knight had long valued that experience. In addition to his academic work, Elson has worked as an expert witness, providing testimony for a fee in legal cases. The firm coordinated that work for nearly 29 years.

A spokesman for Holland & Knight declined to say why the firm’s position on Elson’s briefs on Tesla changed since he filed his first brief last year.

A person familiar with Tesla’s position said Elson’s new amicus brief criticizing the shareholder vote and proxy put him at odds with Tesla, Holland & Knight’s client, as opposed to the earlier brief criticizing Musk and other board members.

Musk and his companies have tried to intimidate critics in the past and, failing that, sought retribution.

In 2022, the Journal reported that Tesla and SpaceX took steps to cut back on their business dealings with law firm Cooley LLP after the firm refused to fire, at Tesla’s behest, an associate who had joined from the U.S. Securities and Exchange Commission. The associate had interviewed Musk as part of an investigation that resulted in Musk agreeing to pay a $20 million fine.

In his new amicus brief filed this week, Elson argues that the shareholder vote on June 13 shouldn’t be treated as a remedy to the court’s decision, and that doing so would have significant impacts on other questions of Delaware law.

Elson said he disagreed that his brief had any conflict of interest with Tesla. He worked infrequently with Holland & Knight, and never as an attorney. Further, he said his brief is in the interest of Tesla shareholders, who benefit from Musk’s pay package being rescinded.

Now, his filings bring the incident to the attention of the judge who has already ruled against Musk once on this matter.

“The Court should have no illusions about what happened here," Elson wrote. “The frivolous assertion of a conflict was a fig leaf for Musk, acting through Tesla, to try to bully a law professor."

Write to Ben Foldy at ben.foldy@wsj.com