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Lawyers who voided Elon Musk's pay as excessive want $6 billion fee

Published 03/01/2024, 06:00 PM
Updated 03/03/2024, 08:20 AM
© Reuters. FILE PHOTO: Elon Musk, CEO of SpaceX and Tesla and owner of X, formerly known as Twitter, attends the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition centre in Paris, France, June 16, 2023. REUTERS/Gon

By Tom Hals

WILMINGTON, Delaware (Reuters) -The lawyers who voided Elon Musk's $56 billion compensation as excessive on Friday sought a record a $6 billion legal fee, payable in the electric car maker's stock.

"We recognize that the requested fee is unprecedented in terms of absolute size," the three law firms said in a filing with the Court of Chancery in Delaware.

The fee works out to an hourly rate of $288,888, they said.

Musk blasted the request as "criminal," posting on his X platform that "the lawyers who did nothing but damage Tesla (NASDAQ:TSLA) want $6 billion."

Tesla and Musk's attorney did not immediately respond to requests for comment.

The company would pay the lawyers who represented Richard Tornetta, a shareholder who sued Musk in 2018 over the pay package, which a Delaware judge nixed in January.

The electric vehicle maker is being asked to pay the fee because it benefited from the return of Musk's pay package, which the legal team said will result in the return to the carmaker of 266 million shares.

"This structure has the benefit of linking the award directly to the benefit created and avoids taking even one cent from the Tesla balance sheet to pay fees," the lawyers wrote, adding that the fee would be tax-deductible to Tesla.

Judge Kathaleen McCormick (NYSE:MKC), who is overseeing the case and will decide on the fee, called Musk's pay "unfathomable" in her ruling.

The company may object to the fee, as it has a fee request in a similar case over the pay for its directors.

The largest settlements in shareholder cases have occurred in federal court. The biggest fee was $688 million in 2008 for the legal team that obtained a $7.2 billion settlement in a securities fraud case over the failure of Enron Corp.

The Tesla fee request comes as the Delaware Supreme Court considers an appeal of a $267 million fee in a case that settled for $1 billion involving Dell Technologies (NYSE:DELL).

Delaware judges have said that pursuing cases deep into litigation, through depositions and toward trial, should get a higher percentage of the recovery to reflect the risk and effort. The Musk pay case went to a one-week trial.

Opponents of this approach argue that as settlements and judgments grow in size, attorneys should collect a declining percentage to avoid overcompensation. The legal team said the requested fee worked out to about 11% of the judgment.

© Reuters. FILE PHOTO: Elon Musk, CEO of SpaceX and Tesla and owner of X, formerly known as Twitter, attends the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition centre in Paris, France, June 16, 2023. REUTERS/Gonzalo Fuentes/File Photo

Musk's pay package consisted of stock options that allowed him to buy Tesla stock at heavily discounted prices and required him to hold the stock for five years. The legal team said they were seeking stock without restrictions on selling it.

The shareholder's legal team comprised three law firms, Bernstein Litowitz Berger & Grossmann and Friedman Oster & Tejtel, both based in New York, and Andrews & Springer of Wilmington.

Latest comments

they should claw that back from enron musk
A lawyer has the ability to pursue justice or abuse their position to unjustly enrich themselves. Their ethics are a moral imperative that's totally nowhere to be found!!
this is disgusting all around
crones defending crones
If i was the judge I order $1 per hour for wasting everyones time and to ensure these cases never happen again
You seem unaware that they won the case.
Their request is unfathomable
Lawyers are blood suckers, as always.
until you need one
A smart way to own Musk's brain...
Musk should appreciate the troll anyway. An absurd fee follows an absurd pay package 😂
lawyers have turned the justice system into an economic system desiged to enrich lawyers
its hard to decide which group of people are the biggest scum of the earth... politicians, lawyers or bankers.
We will see more bad things happen as long as people who are understood to confront them are allowed to enrich themselves by doing so. Make no mistake about this.
The ruling against Musk is tyrannical by any ethical free Nation's standards. If appealed to SCOTUS, it would be reversed. And the legal entities responsible for the ruling against Musk should be jailed for corruption.
Rofl
are you so weak and pathetic you want to jail random people who make legal arguements you disagree with? I am guessing you are short IRL
The irony here is almost too ridiculous to even fathom.
😭
ឆោម យ៉ត
🤣🤣🤣🤣🤣
But what justified the size of his pay package. That is unbelievable.
Especially as he uses to rake in vast amounts of tax payer money for his factories from governments all over the world!
because he met timely impossible company benchmarks that gave investors a 10x return it was previously agreed on, if he hadn't accomplished it he wouldn't have got the pay, the investors will revote the package back so if the lawyers were to get this $6 billion then everyone is behind $6 billion value from where they would have been as investors, it's complete BS and it's making the stock crash down today on top of that so these lawyers need to be sued
The judge has a symbol! The justice department is now gone beyond partisanship to overt corruption….. haha. This article is a glaring example of AI deficiency and hypocritical human behaivor.
Unjustified paranoia.
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