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- Lawyers for a Tesla shareholder successfully scuttled Elon Musk’s $56 billion pay package from Tesla.
- They are now asking a judge for about 11% of Tesla shares, valued at about $6 billion, to cover legal fees.
- Musk called the question “criminal.”
Lawyers for a Tesla shareholder successfully argued in a Delaware court that Elon Musk does not 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 attorney fees, the attorneys argued before a Delaware judge.
The attorneys argued in a court filing Friday that fees for their litigation work amount to about 11% of the pay package. That’s equivalent to about $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 Court of Chancery now has to decide how much of the compensation package can go toward attorneys’ fees.
Tesla and Musk can still choose to appeal the overall decision to void the CEO’s stock options.
According to the Journal, plaintiff attorneys typically get one-third of the verdict or settlement amount. The attorneys argued in their filing that they were not asking for “33% of the quantifiable conferred benefit” based on “well-established precedent.”
“Plaintiff’s attorneys have not been paid for their work, nor reimbursed for any of their costs or expenses, and litigating this action required the allocation of a substantial amount of plaintiff’s attorney time and resources over six years, including considerable out-of-pocket expenses,” the attorneys wrote.
Musk, as expected, is not happy with the lawyers’ demand.
“The lawyers who did nothing but hurt Tesla want $6 billion,” he wrote on X on Friday afternoon. “Offender.”
In 2018, Richard Tornetta, a former heavy metal drummer and Tesla shareholder, sued the electric vehicle company, alleging that Tesla’s CEO took advantage of his close ties to the company’s board members to secure a pay package. massive and, as a result, the company violated its fiduciary responsibilities to its shareholders.
McCormick reached an agreement in January with Tornetta and voided Musk’s pay package.
The decision infuriated Musk, who later proclaimed on X that “a company should never be incorporated in the state of Delaware.”
Tornetta’s attorneys, including lead attorney Greg Varallo of Bernstein Litowitz Berger & Grossman, wrote in Friday’s court filing that his team is prepared to “eat our kitchen.”
The companies Andrews & Springer and Friedman Oster & Tejtel were also part of the plaintiff’s team.
Lawyers acknowledged that the payday would be a record demand.
“We recognize that the requested fee is unprecedented in terms of its absolute size,” he said in the filing. “The size of the compensation sought is large because the value of the benefit to Tesla that the plaintiff’s attorney achieved was enormous.”
Musk did not immediately respond to a request for comment sent after hours.