Taking to his social media platform, X, Elon Musk voiced strong opposition to the legal fee request filed by the attorneys representing Tesla shareholders in the recent pay package case, calling the sum “criminal”.
“The lawyers who did nothing but damage Tesla want $6 billion. Criminal.” the Tesla boss wrote. Musk was responding to a post by X user DogeDesigner, who shared a screenshot of a Reuters report about the lawyers’ exorbitant demand.
Unsurprisingly, reactions to the news of the lawyers’ fee request included criticism and scepticism. “They are doing to you what they have been attempting to do to Trump,” one user wrote.
They are doing to you what they have been attempting to do to Trump.
— Decentralise Party (@DecentraliseP) March 2, 2024
Even at insane lawyer rates how the heck do they get to $6 billion?
— Paul A. Szypula 🇺🇸 (@Bubblebathgirl) March 2, 2024
“Even at insane lawyer rates how the heck do they get to $6 billion?,” another asked. “The whole thing is straight up robbery, plain and simple,” a user claimed.
The whole thing is straight up robbery, plain and simple..
— Chuck Callesto (@ChuckCallesto) March 2, 2024
Lawyers representing a Tesla shareholder who sued Elon Musk’s electric car company over a massive pay package, arguing it was “beyond the bounds of reasonable judgment,” are now seeking 11 per cent of Tesla shares for attorney fees, worth about $5.6 (£4.42) billion based on the current price of the company’s stock at $202.64 (£159.99) per share.
Approving this request would not only jeopardise Musk’s position as the world’s richest person, but it would also be the largest such award by a significant margin. For context, lawyers in a class-action suit related to the Enron collapse received a record $688 million in legal fees in 2008.
Tesla shareholders challenge Elon Musk’s compensation package in legal battle
“We are prepared to eat our cooking,” wrote the Tesla plaintiff attorneys, claiming the sum is justified because they worked purely on a contingency basis for more than five years. If they had lost, they would have gotten nothing.
The requested legal fees represent 11 per cent of the stock package that Musk was seeking in compensation, which Judge Kathaleen St. Jude McCormick ruled illegal in January. According to the attorneys, their request will not impact Tesla’s balance sheet as it’s tax-deductible.
This is what founder/ CEOs do!
How was he rewarded?
Elon Musk is not entitled to his $55 billion compensation package awarded by Tesla’s board of directors, a Delaware judge, Kathaleen St. Jude McCormick. pic.twitter.com/eIRqqvgdJv
— Jared Stuart (@_JaredStuart) February 27, 2024
Aside from this, the attorneys are seeking $1.1 (£0.87) million in expenses, according to a report by CNBC.
In 2018, Tesla shareholder Richard Tornetta, a former heavy metal drummer, filed a lawsuit against Tesla. He alleged that the electric vehicle company’s CEO used his influence over the board to secure an excessive compensation package, thereby violating the company’s fiduciary duty to its shareholders.
Tornetta’s lawyers, including lead attorney Greg Varallo of Bernstein Litowitz Berger & Grossman, acknowledged the request would be a record-breaking ask.
“We recognize that the requested fee is unprecedented in terms of its absolute size,” he said in the filing. “The size of the requested award is great because the value of the benefit to Tesla that plaintiff’s counsel achieved was massive”.
Siding with the shareholder lawyers’ argument, Judge McCormick acknowledged that Musk personally dictated the landmark 2018 pay package in sham negotiations with non-independent directors. This package would have doubled Musk’s stake in Tesla, increasing it from his current 13 per cent holding.
