Lawyers Seek $6 Billion Worth of Tesla Stock in Elon Musk Pay Package Case
Elon Musk, the controversial owner of Tesla, is facing yet another legal battle. Lawyers who successfully sunk Musk’s $56 billion pay package are now seeking approximately $6 billion worth of Tesla stock as attorney fees. This request comes after a Delaware court ruled that Musk does not deserve the massive compensation package for his work at the electric vehicle (EV) company. Musk has expressed his displeasure with the lawyers’ demand, calling it “criminal.”
The lawyers representing a Tesla shareholder argued in court that a portion of Musk’s compensation package should be allocated to them as attorney fees. They claimed that their litigation work amounted to about 11% of the pay package, which translates to roughly $5.96 billion worth of Tesla shares based on the current stock price. Chancellor Kathleen McCormick of the Delaware Chancery Court now has the task of deciding how much of the compensation package can be allocated to attorney fees.
While Tesla and Musk still have the option to appeal the decision to void the CEO’s stock options, the lawyers are adamant about their request. They stated in their court filing that they were not seeking the typical one-third share of a verdict or settlement amount, as is customary for plaintiff attorneys. Instead, they argued that their request was based on the substantial amount of time, resources, and out-of-pocket expenses they invested in litigating this case over six years.
Unsurprisingly, Musk expressed his dissatisfaction with the lawyers’ demand. Taking to X, he wrote, “The lawyers who did nothing but damage Tesla want $6 billion. Criminal.” This statement reflects Musk’s ongoing frustration with legal battles surrounding his company.
The case against Musk’s pay package was initially brought forward by Richard Tornetta, a former heavy metal drummer and Tesla shareholder. Tornetta alleged that Musk had exploited his close connections with the company’s board members to secure an exorbitant compensation package, resulting in a breach of fiduciary responsibilities towards shareholders. Chancellor McCormick agreed with Tornetta’s claims and struck down Musk’s pay package in January.
Tornetta’s legal team, led by attorney Greg Varallo of Bernstein Litowitz Berger & Grossman, is prepared to “eat their cooking,” as they put it. The firms Andrews & Springer and Friedman Oster & Tejtel were also part of the plaintiff’s team. While they acknowledge that their requested fee is unprecedented in terms of its size, they argue that it is justified considering the massive benefit they achieved for Tesla.
As of now, Musk has not provided any comment on the matter. It remains to be seen how Chancellor McCormick will rule on the allocation of attorney fees in this high-stakes case. Regardless of the outcome, this legal battle adds to the growing list of controversies surrounding Elon Musk and his leadership of Tesla.
