Lawyers Who Argued Excessive Tesla Pay Package Now Seek $6B Fee
In a shocking turn of events, the attorneys who successfully argued that Tesla CEO Elon Musk’s $56 billion pay package was excessive are now demanding a staggering fee of nearly $6 billion. If granted, this jaw-dropping payday would break all previous records for attorney fees and set a new standard in the legal world.
The three law firms representing the attorneys filed a request in Delaware’s Court of Chancery, asking for the fee to be paid in Tesla’s stock. They acknowledge that the requested fee is unprecedented in terms of its absolute size, but they firmly believe it is justified given the magnitude of their accomplishment.
Elon Musk, however, wasted no time in expressing his disdain for the attorneys’ demand. He labeled it as “criminal” and took to his social media platform, X, to criticize the lawyers who he claims did nothing but damage Tesla. According to Musk, they are seeking $6 billion for their efforts.
The legal team in question represented Tesla stockholder Richard Tornetta, a former drummer for the Philadelphia-based thrash band Dawn of Correction. Tornetta filed the lawsuit against Musk in 2018 on behalf of his fellow stockholders. The lawsuit alleged that Musk had ultimate control over the approval process for his compensation package and that the board misled investors who voted on his windfall.
In January, Judge Kathaleen McCormick of the Court of Chancery ruled in favor of the lawsuit, deeming Musk’s pay package “an unfathomable sum” that was awarded through a deeply flawed process. This ruling voided Musk’s pay package, leading to the attorneys’ demand for their fee.
The attorneys argue that Tesla should pay their eye-popping fee because the company benefited from their win through stock returns. They assert that their fee is directly linked to the benefit created and would not require Tesla to use any funds from its balance sheet. Furthermore, they emphasize that the fee would be tax-deductible.
If the attorneys’ demand is granted, it would surpass the previous record for the largest legal fee of $688 million, awarded in 2008 in a securities fraud case related to the collapse of Enron Corp.
Elon Musk, currently the richest man in the world with a net worth of $215 billion, is expected to appeal the ruling. In addition, he has expressed his intention to transfer Tesla’s site of incorporation from Delaware to Texas following the lawsuit. He has already moved SpaceX’s incorporation to Texas two weeks ago.
The three law firms representing the Tesla shareholders in this case are Bernstein Litowitz Berger and Grossmann, Friedman Oster and Tejtel, both based in New York, and Andrews and Springer of Wilmington, DE.
This legal battle between Elon Musk and the attorneys who challenged his pay package has captured the attention of many. The outcome of this fee request will undoubtedly have significant implications for attorney fees in the future and may set a precedent for similar cases. As both sides continue to clash, the legal world eagerly awaits the final decision from the Delaware judge.
