Wilmington, Delaware – Attorneys who successfully argued that Tesla CEO Elon Musk’s $56 billion pay package was excessive are now seeking a nearly $6 billion award. The lawyers are requesting to be paid in the form of Tesla stock, which would set a new record for attorney fees if granted.
In a filing made in Delaware’s Court of Chancery, the three law firms acknowledged that the requested fee is unprecedented in terms of its size. The proposed fee translates to an hourly rate of $288,888.
Elon Musk responded to the attorneys’ demand, calling it “criminal” and claiming that the lawyers who “did nothing but damage Tesla” now want $6 billion. Musk expressed his view on his social media platform X.
The legal team represented Tesla stockholder Richard Tornetta, a former drummer for Philadelphia-based thrash band Dawn of Correction. Tornetta sued Musk in 2018 on behalf of his fellow stockholders, alleging that Musk controlled the approval process for his compensation package and that the board misled investors who voted on the CEO’s pay.
In January, Judge Kathaleen McCormick of the Court of Chancery ruled in favor of the suit, deeming Musk’s pay package “an unfathomable sum” awarded through a “deeply flawed” process.
The attorneys argued that Tesla should pay their fee because the company benefited from their win. The victory would result in the return of 266 million shares to Tesla, which is currently valued at about $53.9 billion.
They emphasized that their fee structure directly links the award to the benefit created and avoids taking any money from Tesla’s balance sheet. Additionally, they noted that the fee would be tax-deductible.
The previous record for the largest legal fee was $688 million, awarded in 2008 in a securities fraud case involving the collapse of Enron Corp.
Elon Musk, the richest man in the world with a net worth of $215 billion, is expected to appeal the ruling. He has also expressed interest in transferring Tesla’s site of incorporation from Delaware to Texas following the lawsuit. Musk recently relocated SpaceX’s incorporation to Texas.
Three law firms represent the Tesla shareholders in this lawsuit: Bernstein Litowitz Berger and Grossmann, Friedman Oster and Tejtel, and Andrews and Springer.
It remains to be seen how the court will decide on the attorneys’ demand for a $6 billion award.