Attorneys for Tesla stockholders, who succeeded in arguing against Elon Musk's unlawful compensation package, seek $5.6 billion in company shares as legal fees.
This request, submitted to the Delaware judge, would represent a substantial portion of Tesla's value, equivalent to 11% of the $55 billion in shares sought by Musk in the disputed package.
The attorneys argue that this award, if approved, would not affect Tesla's balance sheet and is tax deductible. Additionally, they request $1.1 million for costs.
The presiding judge has been requested by the attorneys who prevailed in their argument that Tesla CEO Elon Musk's enormous compensation package was unlawful and ought to be revoked to award them $5.6 billion in company shares as legal costs.
(Photo : by Omar Marques/Getty Images)The presiding judge has been requested by the attorneys who prevailed in their argument that Tesla CEO Elon Musk's enormous compensation package was unlawful and ought to be revoked to award them $5.6 billion in company shares as legal costs.
The Delaware judge's request was made by the lawyers for Tesla stockholders in the lawsuit that was determined in January in court documents that were submitted on Friday.
If approved, the sum would seem to be by far the greatest such reward. Attorneys representing clients in class-action lawsuits resulting from Enron's demise received a record $688 million in legal fees in 2008.
The suggested amount is equivalent to 11% of the approximately $55 billion worth of Tesla shares that Musk was requesting as part of the pay package that was declared unlawful in January by Judge Kathaleen St. Jude McCormick.
The attorneys said that the request is not only tax deductible, but it also does not subtract anything from the balance sheet of the electric vehicle firm. Additionally, they are requesting $1.1 million for costs.
Legal Team's Documentation and Argument on Hourly Rate and Expense Reimbursement
According to statements from the legal team, they documented a total of 19,499.95 hours over the duration of the case. This calculation implies that a potential $6 billion award would translate to an hourly rate of approximately $305,550. However, the attorneys emphasized that the number of hours worked should be viewed as a secondary factor, if relevant at all.
They contended, "Delaware aims to encourage efficient litigation rather than impose penalties." The attorneys, who are located in Delaware and New York, additionally requested an expense reimbursement totaling $1.1 million.
In her decision, Judge McCormick agreed with the shareholder attorneys' contention that Musk personally oversaw the historic 2018 compensation package during fraudulent talks with non-independent directors.
According to a 200-page order by McCormick, Musk's compensation package was the highest ever reported in corporate America. She said that part of the reason the package was "deeply flawed" was because Musk directed the process of selecting it, and Tesla board members "who were beholden to Musk" approved it.
Musk is anticipated to challenge the decision. Additionally, the centibillionaire and CEO has stated that he plans to pursue moving Tesla's incorporation location to Texas.
Musk's Tesla ownership would have almost doubled as a result. Right now, he owns 13%.
