Wednesday, July 24, 2024

Lawyers seeking $6B worth of Tesla stock after sinking Musk's pay package

Advertisers have pulled out of X in recent months following a series of controversies surrounding its owner, Elon Musk.
Antonio Masillo

  • Lawyers for Tesla shareholder successfully sink Elon Musk's $56 billion pay package from Tesla
  • Now they are asking a judge for attorney fees for about 11% of Tesla stock, worth about $6 billion.
  • Musk called the hearing a “crime.”

Lawyers for a Tesla shareholder successfully argued in a Delaware court that Elon Musk is not entitled to $55 billion in damages for his work at the EV company.

Instead, the attorneys argued to the Delaware judge that some of that compensation package should go toward their attorney fees.

Lawyers argued in court on Friday that the fee for their litigation work is about 11% of the pay package. That's $202.64 worth of Tesla stock, worth $5.96 billion based on the company's current stock price.

Delaware Chancery Court President Kathleen McCormick must now decide how much of the compensation package can go toward attorneys' fees.

Tesla and Musk may still choose to appeal the overall decision to revoke the CEO's stock options.

According to the Journal, plaintiff attorneys typically receive about one-third of the judgment or settlement amount. In their plea, the lawyers argued that they were not asking for “33% of the quantifiable benefit conferred” based on “well-established precedent”.

“Plaintiff's counsel were not remunerated for their work, were not reimbursed for any of their costs or expenses, and required a substantial allocation of plaintiff's counsel's time and resources to litigate this action. Expenses,” the attorneys wrote.

Musk, unsurprisingly, was not happy with the lawyers' request.

“Lawyers who have done nothing but damage Tesla want $6 billion,” he wrote on Friday evening at X. “Guilty.”

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In 2018, former heavy metal drummer and Tesla shareholder Richard Tornetta filed a lawsuit against the EV company, arguing that the Tesla CEO used his close ties to the company's board members to receive a massive pay package, resulting in the company violating it. Fiduciary responsibilities to its shareholders.

McCormick agreed with Tornetta in January and overturned Musk's pay package.

The decision enraged Musk, who later declared at X that he “shouldn't incorporate your company in the state of Delaware.”

Tornetta's attorneys, including lead attorney Greg Varallo of Bernstein Lidowitz Berger & Grossman, wrote in a court filing Friday that his team is willing to “eat our cooking.”

Andrews & Springer and Friedman Oster & Tejdel were also part of the plaintiff's team.

Lawyers realized that payday would be a record-breaking question.

“We recognize that the requested fee is unprecedented in terms of its absolute magnitude,” he said in the filing. “The amount of the requested award is large because the value of Tesla's benefit achieved by plaintiff's counsel is enormous.”

Musk did not immediately return a request for comment sent outside business hours.

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