- Lawyers for Tesla shareholders have successfully canceled Elon Musk's $56 billion compensation package from Tesla.
- They are now asking a judge to give them about 11% of Tesla's stock, worth about $6 billion, for legal fees.
- Musk called the request “criminal.”
Lawyers for Tesla shareholders have successfully argued in a Delaware court that Elon Musk is not entitled to a $55 billion payout for his work at the electric car company.
Instead, the lawyers argued to a Delaware judge, a portion of that compensation package should be paid to them in attorney fees.
The lawyers argued in a court filing Friday that fees for litigation work amounted to about 11% of their compensation package. This equates to approximately $5.96 billion worth of Tesla stock, based on the company's stock's current price of $202.64 per share.
Delaware Court of Chancery Chief Judge Kathleen McCormick must now decide how much of the compensation should go toward attorney fees.
Tesla and Musk can still choose to appeal the overall decision to revoke the CEO's stock options.
Plaintiff lawyers typically receive one-third of the verdict or settlement amount, the paper said. The lawyers argued in their filing that they were not seeking “33% of the quantitative award of benefits” based on “established precedent.”
“Plaintiffs' attorneys have not been paid for their work, nor have their costs and expenses been reimbursed, and the litigation of this case has cost plaintiffs' attorneys significant time over a six-year period, including at significant out-of-pocket expense.'' and resources had to be allocated for “costs,'' the attorneys wrote.
Understandably, Musk is not happy with his lawyers' demands.
“Lawyers who did nothing but harm Tesla are demanding $6 billion,” he wrote in X on Friday evening. “Criminal.”
In 2018, former heavy metal drummer and Tesla shareholder Richard Tornetta claimed that Tesla's CEO used his close relationships with members of the company's board of directors to secure huge compensation, which resulted in the company's It sued the EV company, claiming it had breached the contract. Fiduciary Responsibility to Stockholders.
Mr. McCormick reached an agreement with Mr. Tornetta in January that ended Mr. Musk's salary package.
The decision infuriated Musk, who later declared in X that he should “never establish a company in Delaware.”
Mr. Tornetta's lawyers, including lead attorney Greg Ballaro of Bernstein Litowitz Berger & Grossman, said in a court filing Friday that Mr. Tornetta's team is prepared to “eat our food.” .
Andrews & Springer and Friedman Oster & Teitel were also part of the plaintiff team.
Lawyers knew the payday would be a record high.
“We recognize that the fees requested are unprecedented in their absolute magnitude,” he said in the filing. “The magnitude of the award requested is large because the value of the benefit to Tesla achieved by plaintiff's attorneys was so great.”
Musk did not immediately respond to a request for comment outside of business hours.
