Lawyers who scuttled Musk39s pay package are demanding 6 billion

Lawyers who scuttled Musk's pay package are demanding $6 billion in Tesla shares

Downward Angle Symbol A symbol in the form of an angle pointing downwards. Advertisers have fled X in recent months following a series of controversies surrounding its owner Elon Musk. Antonio Masiello

  • Lawyers for a Tesla shareholder have successfully secured Elon Musk's $56 billion pay package from Tesla.
  • Now they're asking a judge to give away about 11% of Tesla's shares, worth about $6 billion, for legal fees.
  • Musk called the request “criminal.”

Lawyers for a Tesla shareholder have successfully argued in a Delaware court that Elon Musk doesn't deserve a $55 billion compensation package for his work at the electric vehicle company.

Instead, part of that compensation package should go to them in the form of legal fees, the lawyers argued to a Delaware judge.

The lawyers argued in a statement of claim filed Friday that the fee for their litigation work represents about 11% of the salary package. That equates to approximately $5.96 billion worth of Tesla stock, based on the company's current stock price of $202.64 per share.

Chancellor Kathleen McCormick of the Delaware Chancery Court must now decide how much of the compensation package can be used for legal fees.

Tesla and Musk still have the opportunity to appeal the overall decision to void the CEO's stock options.

According to the Journal, plaintiffs' attorneys typically receive one-third of a verdict or settlement amount. The attorneys argued in their filing that they were not seeking the “33% of quantifiable benefit granted” based on “well-established precedent.”

“Plaintiff’s counsel was not paid for their work, nor were they reimbursed for any costs or expenses, and litigating this action required significant expenditure of time and resources by Plaintiff’s counsel over a period of six years, including significant out-of-pocket expenses. “Costs,” the lawyers wrote.

Unsurprisingly, Musk is not happy with the lawyers' demand.

“The lawyers who did nothing but damage Tesla want $6 billion,” he wrote on X on Friday evening. “Criminal.”

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In 2018, Richard Tornetta, a former heavy metal drummer and Tesla shareholder, sued the electric vehicle company, claiming that the Tesla CEO used his close relationships with the company's board members to secure a massive pay package, and that the company thereby breached its fiduciary duties to its shareholders.

McCormick agreed with Tornetta in January and rejected Musk's pay package.

The decision infuriated Musk, who later announced on X that you should “never incorporate your company in the state of Delaware.”

Tornetta's lawyers, including lead attorney Greg Varallo of Bernstein Litowitz Berger & Grossman, wrote in Friday's court filing that his team was ready to “eat our food.”

The plaintiff's team also included the law firms Andrews & Springer and Friedman Oster & Tejtel.

The lawyers realized that the payday would be a record-breaking claim.

“We recognize that the requested fee is unprecedented in its absolute magnitude,” he said in the filing. “The amount of the award sought is great because the value of the benefit that plaintiff’s counsel obtained for Tesla was enormous.”

Musk did not immediately respond to a request for comment sent outside of business hours.