Lawyers who successfully argued that Elon Musk’s $56 billion compensation was excessive have set a record $6 billion worth of legal fees to be paid in electric car maker stock, according to court filings. I’m looking for.
“We recognize that the requested fees are unprecedented in absolute magnitude,” the three law firms said in a filing Friday in Delaware’s Court of Chancery. There is.
The fee would be $288,888 per hour, according to the filing.
The electric car maker is being asked to pay a fee for benefiting from Musk’s payback, which lawyers said would result in 266 million shares being returned to the automaker.
“This structure has the benefit of being tied directly to the profits earned, and avoids having every penny of fee payments taken off Tesla’s balance sheet,” the shareholder legal team said, adding that the fees are also tax-free for Tesla. He pointed out that it would be subject to deduction.
The compensation is being sought by lawyers representing Tesla shareholder Richard Tornetta, who sued Musk over his pay package in 2018, but a Delaware judge dismissed the lawsuit in January.
The three law firms are Bernstein Litowitz Berger & Grossman and Friedman Oster & Teitel, both based in New York, and Wilmington-based Andrews & Springer.
The request for fees must be approved by Kathleen McCormick, the judge overseeing the case. She called Musk’s compensation “incalculable” in her January ruling.
Tesla, Musk’s lawyer, and Musk did not respond to requests for comment.
The company may challenge the fees because it has filed similar lawsuits for fees related to director compensation.
The largest settlement in a shareholder case was in federal court, with the largest settlement being $688 million in 2008 for attorneys who secured a $7.2 billion settlement in the securities fraud case surrounding Enron’s bankruptcy. .
The charge to Tesla comes as the Delaware Supreme Court considers an appeal of a $267 million fee in a $1 billion case involving Dell Technologies.
Delaware judges said pursuing a case deeper into trial through depositions should result in a higher percentage recovery to reflect the risk and effort. Musk’s compensation case lasted a week.
Opponents of this approach argued that as the size of a settlement or judgment increases, attorneys should reduce the percentage they collect to avoid excessive compensation.
The defense team said the fees requested amounted to about 11% of the judgment.
Musk’s pay package consisted of stock options that allowed him to buy Tesla stock at a deep discount and required him to hold the stock for five years. The defense team said they are seeking unrestricted shares that can be sold.
