In a recent court ruling in Delaware, lawyers representing a Tesla shareholder successfully challenged Elon Musk’s $55 billion compensation package from Tesla. They are now seeking about 11% of Tesla shares, worth approximately $6 billion, as attorney fees. Musk has referred to this request as “criminal.”
The attorneys argued that Musk does not deserve such a substantial compensation package and that a portion of it should go towards compensating them for their legal work. This amounts to roughly 11% of the pay package, equivalent to $5.96 billion in Tesla shares based on the current stock price.
Chancellor Kathleen McCormick of the Delaware Chancery Court will need to determine the appropriate amount of compensation for the attorneys’ fees. Tesla and Musk still have the option to appeal the decision to void the CEO’s stock options.
Typically, plaintiff attorneys receive one-third of a verdict or settlement amount. However, the attorneys in this case claim they are not seeking the standard percentage but rather a fair share for their substantial time and resources dedicated to the litigation over the past six years.
Unsurprisingly, Musk expressed dissatisfaction with the lawyers’ demand, calling it “criminal.” In a previous lawsuit filed by Richard Tornetta, a former heavy metal drummer and Tesla shareholder, the court ruled in favor of voiding Musk’s pay package, leading to Musk’s criticism of incorporating a company in Delaware.
The lawyers involved, including lead attorney Greg Varallo of Bernstein Litowitz Berger & Grossman, from firms Andrews & Springer and Friedman Oster & Tejtel, acknowledge that their fee request is unprecedented in size but justified based on the significant benefit they believe they achieved for Tesla. Musk has not yet responded to the request for comment.
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