April 19, 2024

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Lawyers who successfully argued that Musk's $56 billion Tesla pay package was excessive are seeking a staggering $6 billion fee.

Lawyers who successfully argued that Musk's $56 billion Tesla pay package was excessive are seeking a staggering $6 billion fee.

Lawyers who successfully argued that Tesla CEO Elon Musk's $56 billion pay package was excessive are asking a Delaware judge to award them nearly $6 billion.

If granted, a stunning payday for legal eagles — which they are demanding to be paid in shares of the electric car maker — would shatter previous records for attorney fees.

“We recognize that the fees requested are unprecedented in absolute magnitude,” the three law firms said in a filing in Delaware Chancery Court seeking the fees.

Lawyers who successfully argued that Tesla CEO Elon Musk's $56 billion pay package was excessive are demanding a bonus of nearly $6 billion. Getty Images
Elon Musk criticized the lawyers' request, describing it as “criminal.” Reuters

They noted that the proposed fees translate to an hourly rate of $288,888.

Elon Musk Lawyers criticized the proposal He received a “criminal” award, writing on his social media platform X that “lawyers who have done nothing but hurt Tesla want $6 billion.”

The legal team represents Tesla stockholder Richard Tornetta, who was a drummer in the Philadelphia-based band Dawn of Correction and who sued Musk in 2018 over his princely pay package.

The lawsuit, filed by Tornetta on behalf of fellow shareholders, alleged that Musk ultimately controlled the approval process to determine the terms of his compensation package and that the board misled investors who ultimately voted on the CEO's windfall.

In January, Judge Kathleen McCormick of the court ruled in favor of the suit invalidating Musk's pay package, deeming his compensation an “unfathomable amount” that was awarded through a “deeply flawed” process.

Lawyers for Tesla shareholders argued that Tesla should pay the fees because it benefited from the win via stock returns.

The lawyers argued that Tesla should pay their hefty fees because the automaker benefited from their win, which would see 266 million shares returned to the electric car maker.

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Tesla stock closed Friday at $202.62, meaning the block of shares is worth about $53.9 billion.

“This structure has the advantage of tying the award directly to the interest generated, and avoids taking a dime off Tesla’s balance sheet to pay the fee,” the lawyers wrote.

They indicated that the fees will be tax-deductible.

The previous record for the largest legal fees was $688 million, awarded in 2008 to lawyers who won a $7.2 billion settlement in a securities fraud case over the collapse of Enron.

Musk is currently the richest man in the world, with a fortune of $215 billion, according to the Bloomberg Billionaires Index.

He is expected to appeal the ruling, and said he is looking to move Tesla's founding location from Delaware, which about 70% of major companies call home, to Texas after the lawsuit.

He moved SpaceX's founding to Texas two weeks ago.

Three law firms represented Tesla shareholders in the lawsuit: Bernstein Litowitz Berger & Grossman, and Friedman Oster & Tegtel, both of New York; and Andrews & Springer of Wilmington, DE.

With mail wires.