Wilmington, Delaware – Lawyers representing a Tesla shareholder have successfully contested Elon Musk’s $56 billion compensation package, arguing that the CEO does not deserve such a substantial reward for his work at the electric vehicle company. The lawyers are now requesting that a portion of the compensation package be allocated to them in attorney fees, which would amount to around 11% of the package, or approximately $6 billion worth of Tesla shares.
In a filing submitted to a Delaware court, the attorneys asserted that their litigation work warranted a fee of about 11% of the pay package. Based on the current stock price of Tesla at $202.64 per share, this would equate to $5.96 billion worth of shares. The decision of how much of the compensation package can be attributed to attorney fees now lies with Chancellor Kathleen McCormick of the Delaware Chancery Court.
While Tesla and Musk still have the option to appeal the overall decision to void the CEO’s stock options, it is customary for plaintiff attorneys to receive around one-third of a verdict or settlement amount. However, the attorneys in this case stated that they were not seeking the traditional 33% of the conferred benefit based on precedent. They emphasized that they had not been compensated for their work on the case, nor had their costs or expenses been reimbursed. The lawyers argued that their efforts in the litigation process had spanned six years and required substantial time and resources, including significant out-of-pocket expenses.
Unsurprisingly, Musk voiced dissatisfaction with the lawyers’ request. In a message posted on X, Musk referred to the lawyers as “criminals” and expressed his dissatisfaction with their demand for $6 billion. Meanwhile, media remains unresponsive to his statements on the matter.
This legal battle originates from a 2018 lawsuit filed by Richard Tornetta, a former heavy metal drummer and Tesla shareholder. Tornetta alleged that Musk had leveraged his close connections with board members to secure a massive pay package, thereby breaching the company’s fiduciary responsibilities to its shareholders. In January, Chancellor McCormick agreed with Tornetta and invalidated Musk’s compensation package, triggering Musk’s frustration and his proclamation on X advising against incorporating companies in Delaware.
In their court filing, Tornetta’s lawyers, including lead attorney Greg Varallo of Bernstein Litowitz Berger & Grossman, acknowledged that their requested fee was unprecedented in terms of its absolute size. However, they emphasized that the value of the benefit achieved for Tesla by plaintiff’s counsel was substantial, justifying the size of the requested award.
Neither Musk nor his representatives have yet responded to requests for comment outside of working hours.