Elon Musk
Three companies that represented a Tesla shareholder are demanding a record fee from the electric vehicle maker because they benefited from the return of Musk's stock options
Portal
Lawyers who successfully argued that Elon Musk's $56 billion pay package was excessive are seeking a record $6 billion in legal fees, payable in the electric car maker's shares, a court filing says.
“We recognize that the fee requested is unprecedented in its absolute magnitude,” the three law firms said in the filing Friday in Delaware Chancery Court.
The fee amounts to an hourly rate of $288,888, according to the filing.
The electric vehicle maker is being ordered to pay the fee because it benefited from the return of Musk's pay package, which the legal team says will result in the return of 266 million shares to the automaker.
Elon Musk is suing OpenAI and accuses it of putting profit over humanity
“This structure has the advantage of directly linking the premium to the benefit created and avoiding taking even a penny from Tesla's balance sheet to pay fees,” the shareholders' legal team said, pointing out , that the fee for Tesla is also tax deductible.
The fee is being sought by lawyers who represented Richard Tornetta, a Tesla shareholder who sued Musk in 2018 over the pay package, which a Delaware judge rejected in January.
The three law firms are Bernstein Litowitz Berger & Grossmann and Friedman Oster & Tejtel, both based in New York, and Andrews & Springer of Wilmington.
The fee request must be approved by Kathaleen McCormick, the judge overseeing the case. In her January ruling, she called Musk's salary “unfathomable.”
Tesla, Musk's lawyer and Musk did not immediately respond to a request for comment.
The company may object to the fee as it has a fee application for the remuneration of its directors in a similar case.
The largest settlements in shareholder lawsuits take place in federal court, where the largest settlement in 2008 was $688 million for the legal team involved in a securities fraud case over Enron Corp.'s failure. reached a $7.2 billion settlement.
The Tesla fee request comes as the Delaware Supreme Court is considering an appeal of a $267 million fee in a case in which Dell Technologies is negotiating a $1 billion settlement became.
Delaware judges said that pursuing cases deep into litigation, through depositions and through trial, should receive a higher percentage of recovery to reflect the risk and effort. A week-long trial was held in the Musk salary case.
Opponents of this approach argued that as settlements and verdicts increase in size, lawyers should collect a decreasing percentage to avoid overcompensation.
The legal team said the requested fee was approximately 11% of the judgment amount.
Musk's pay package consisted of stock options that allowed him to purchase Tesla shares at deeply discounted prices and required him to hold the shares for five years. The legal department said it was looking for shares without sales restrictions.
{{#Ticker}}
{{top left}}
{{bottom left}}
{{top right}}
{{bottom right}}
{{#goalExceededMarkerPercentage}}{{/goalExceededMarkerPercentage}}{{/ticker}}
{{Headline}}
{{#paragraphs}}
{{.}}
{{/paragraphs}}{{highlightedText}}
{{#choiceCards}}
One-time, monthly, yearly
Other
{{/choiceCards}}We will be in touch to remind you to contribute. Watch for a message in your inbox. If you have any questions about contributing, please contact us.