- Lawyers for a Tesla shareholder have successfully obtained a $56 billion pay package from Tesla's Elon Musk.
- Now they are asking the judge for about 11% of Tesla shares, worth about $6 billion, in exchange for attorney's fees.
- Musk described the question as “criminal.”
Lawyers for a Tesla shareholder successfully argued in a Delaware court that Elon Musk is not entitled to a $55 billion compensation package for his work at the EV company.
Instead, part of that compensation package should go to them in attorney fees, the attorneys argued before a Delaware judge.
Their litigation fees amount to about 11% of their pay package, the attorneys argued in a court filing Friday. That works out to about $5.96 billion worth of Tesla shares based on the company's current stock price of $202.64 per share.
Counsel Kathleen McCormick of the Delaware Chancery Court now must decide how much of the award can go toward attorney's fees.
Tesla and Musk could still choose to appeal the sweeping decision to void the CEO's stock options.
According to the magazine, plaintiffs' attorneys typically receive one-third of the judgment amount or settlement amount. The lawyers argued in their filing that they were not asking for “33% of the quantifiable benefit granted” based on “established precedent.”
“Plaintiff's counsel were not paid for their work, none of their costs or expenses were reimbursed, and the litigation of this action required the dedication of a significant amount of Plaintiff's counsel's time and resources over a period of six years, including significant out-of-pocket expenses,” the attorneys wrote. .
Unsurprisingly, Musk was unhappy with the lawyers' request.
“Lawyers who have done nothing but hurt Tesla want $6 billion,” he wrote on X on Friday evening. “criminal.”
In 2018, Richard Tornetta, a former heavy metal drummer and Tesla shareholder, filed a lawsuit against the electric car company, arguing that the Tesla CEO leveraged his close relationships with members of the company's board of directors to secure a huge pay package and, as a result, violated The company's obligations. Its fiduciary responsibilities towards its shareholders.
McCormick agreed in January with Tornita and eliminated Musk's pay package.
The decision angered Musk, who later declared on X that “you should never incorporate your company in Delaware.”
Tornita's lawyers, including lead counsel Greg Varallo of Bernstein Litowitz Berger & Grossman, wrote in the court filing on Friday that his team was ready to “eat our cooking.”
Andrews & Springer and Friedman Oster & Tejtel were also part of the plaintiff's team.
Lawyers realized that a payday would be a standard demand.
“We recognize that the requested fees are unprecedented in terms of their absolute magnitude,” he said in the filing. “The size of the award sought is large because the value of the benefit achieved by Tesla and achieved by plaintiff’s counsel was enormous.”
Musk did not immediately respond to a request for comment sent outside business hours.
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