Attorneys who successfully argued that Tesla CEO Elon Musk’s $56 billion pay package was excessive are demanding a Delaware judge award them nearly $6 billion.
If granted, the legal eagles’ jaw-dropping payday — which they are asking to be paid in the electric car-maker’s stock — would shatter previous records for attorneys fees.
“We recognize that the requested fee is unprecedented in terms of absolute size,” the three law firms said in a filing in Delaware’s Court of Chancery requesting the fee.
The proposed fee translates to an hourly rate of $288,888, they noted.
Elon Musk slammed the attorneys’ proposed award as “criminal,” writing on his social media platform X that the “lawyers who did nothing but damage Tesla want $6 billion.”
The legal team represented Tesla stockholder Richard Tornetta, a onetime drummer for Philadelphia-based thrash band Dawn of Correction, who in 2018 sued Musk over his princely pay package.
The suit, brought by Tornetta on behalf of his fellow stockholders, alleged Musk ultimately controlled the approval process to determine the conditions of his compensation package and that the board misled investors who ultimately voted on the CEO’s windfall.
In January, Judge Kathaleen McCormick of the Court of Chancery ruled in favor of the suit in voiding Musk’s pay package, deeming his compensation “an unfathomable sum” that was awarded through a “deeply flawed” process.
The lawyers argued Tesla should pay their eye-popping fee because the vehicle maker benefited from their win, which would see the return of 266 million shares to the electric carmaker.
Tesla stock closed Friday at $202.62, meaning that block of shares is worth about $53.9 billion.
“This structure has the benefit of linking the award directly to the benefit created and avoids taking even 1 cent from the Tesla balance sheet to pay fees,” the lawyers wrote.
They noted the fee would be tax-deductible.
The previous record for the largest legal fee was $688 million, awarded in 2008 to lawyers who won a $7.2 billion settlement in a securities fraud case over the collapse of Enron Corp.
Musk is currently the richest man in the world, worth $215 billion, according to the Bloomberg Billionaires Index.
He is expected to appeal the ruling and has said he is looking to transfer Tesla’s site of incorporation from Delaware, which about 70% of major companies call home, to Texas following the suit.
He moved SpaceX’s incorporation to Texas two weeks ago.
Three law firms represented the Tesla shareholders in the suit: Bernstein Litowitz Berger and Grossmann, and Friedman Oster and Tejtel, both of New York; and Andrews and Springer of Wilmington, DE.
With Post wires.
Barbara Terrio is a seasoned business journalist, delving into the world of finance, startups, and entrepreneurship. With a knack for demystifying complex economic trends, she helps readers navigate the business landscape. Outside of her reporting, Barbara is an advocate for financial literacy and enjoys mentoring aspiring entrepreneurs.
