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invalidated lawyer Elon Musk’s $56 billion The company claims that Tesla’s compensation is excessive and is seeking $6 billion in legal costs, a record amount for its stock.
“We recognize that the requested fees are unprecedented in their absolute magnitude,” the three law firms said in a filing. Delaware Chancery Court. The fees amount to $288,888 an hour for representing Tesla shareholder Richard Tornetta in his lawsuit to rescind his massive compensation, the law firms said.
The lawyers claim that a Delaware judge ruled that Musk’s close relationship with the directors who approved the deal was not sufficiently disclosed to shareholders, and that the package’s performance targets were met more by Musk than by the company. The move comes more than a month after Musk’s $56 billion compensation package was rescinded because it was too easy to do. Admitted. The $56 billion package was the largest ever offered to the CEO of a publicly traded U.S. company, but Musk did not have a guaranteed salary.
“Lawyers who did nothing but harm Tesla are seeking $6 billion,” Tesla CEO Elon Musk wrote in a post on X (formerly Twitter). “Criminal.”
Elon Musk’s $56 billion compensation package invalidated by judge
Tesla CEO Elon Musk slammed the $6 billion fee bill from shareholder lawyers. (Slaven Vlasic/The New York Times/Getty Images)
EV manufacturers are required to pay compensation attorney’s fee Musk’s lawyers claim that 266 million shares of stock will be returned to him because he profited from having his salary invalidated.
“This structure has the advantage of being tied directly to the profits earned, and avoids taking a cent off Tesla’s balance sheet to pay the fees,” the lawyers wrote. will be tax deductible for the company, it added.
| ticker | safety | last | change | change % |
|---|---|---|---|---|
| TSLA | Tesla Inc. | 202.65 | +0.77 | +0.38% |
Tesla may contest the legal fees sought by the law firm, similar to those sought in similar cases challenging director compensation.
Tesla did not respond to a request for comment.
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Tesla CEO Elon Musk’s $56 billion pay package was invalidated by a Delaware court in January. (Taiju Wang/Reuters Photo)
Historically, the largest shareholder litigation settlements have occurred in federal court. The highest award was $688 million for the legal team that won a $7.2 billion settlement in a securities fraud case in 2008. Enron failure.
Tesla’s request for fees comes as the Delaware Supreme Court considers an appeal of a $267 million fee from a $1 billion lawsuit related to Dell’s technology.
Delaware judges said companies that move their cases deeper into depositions and trials should receive a higher percentage of their recovery to reflect their risk and effort.related incident Musk’s Tesla compensation package I went for a one week trial.
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Tesla may contest the $6 billion fee sought by the shareholder’s legal team. (Wang Zhao/AFP via/Getty Images)
Opponents of this approach argue that as the size of a settlement or judgment increases, attorneys should reduce the percentage they collect to avoid excessive compensation. Lawyers in the Musk case said the $6 billion in fees requested represents about 11% of the judgment.
Under the terms of the compensation plan, Mr. Musk was granted access to: stock option This allowed him to buy Tesla stock at a deep discount and required him to hold the stock for five years. The shareholders’ legal team said they are seeking unrestricted shares to sell.
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The shareholder’s legal team is comprised of three law firms: Bernstein, Litowitz, Berger & Grossman and Friedman, Oster & Teitel in New York, and Andrews & Springer in Wilmington.
Reuters contributed to this report.
