Home » Lawyers who successfully argued Musk pay package was illegal seek $5.6 billion in Tesla stock

Lawyers who successfully argued Musk pay package was illegal seek $5.6 billion in Tesla stock

by FX BrokerNews

Tesla Musk Compensation-Legal Fees

A request has been filed by the legal team that contested the legality of Tesla CEO Elon Musk’s substantial pay package, urging the presiding judge to grant them company stock amounting to $5.6 billion as compensation for legal fees. The attorneys, representing Tesla shareholders in the recently concluded case from January, formally submitted this plea to the Delaware judge through court documents on Friday, March 1, 2024.

In Dover, Delaware, the legal team that successfully contended Elon Musk’s massive pay package at Tesla was illegal and should be nullified is now seeking a substantial reward. They’ve approached the presiding judge, requesting company stock valued at $5.6 billion as compensation for their legal services. This appeal, outlined in court documents submitted on Friday, comes on the heels of the January verdict in which these attorneys represented Tesla shareholders.

If approved, this amount would stand as one of the most significant legal fee awards to date. For context, attorneys in class-action suits arising from the Enron collapse received a record $688 million in legal fees back in 2008.

The Tesla plaintiff attorneys defended their request by emphasizing their contingency-based work over more than five years, stating that their willingness to assume the entire risk justifies the substantial sum. They underscored that if they had lost the case, they would have received no compensation, making the benefit to Tesla “massive.”

The requested award, constituting 11% of Tesla’s stock (approximately $55 billion), aligns with Musk’s sought compensation package, which Judge Kathaleen St. Jude McCormick deemed illegal in January. Importantly, the attorneys argue that this award won’t impact Tesla’s balance sheet and is tax-deductible. Additionally, they are seeking $1.1 million to cover expenses.

In her ruling, Judge McCormick concurred with the shareholder lawyers, asserting that Musk orchestrated the 2018 pay package in non-genuine negotiations with non-independent directors. The package, ruled illegal, would have nearly doubled Musk’s stake in Tesla, where he currently holds 13%.

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