Lawyers Behind Elon Musk’s Reduced Pay Demand Nearly $6 Billion in Tesla Stock; Musk Displays Discontent
Attorneys representing a shareholder of Tesla have successfully contended in a Delaware court that Elon Musk is not entitled to a $55-billion compensation package for his services at the electric vehicle company. Instead, they argued that a portion of this package should be allocated to them as attorney fees.
In a filing presented to a Delaware judge, the lawyers asserted that their litigation efforts warranted compensation amounting to approximately 11% of the pay package, equivalent to around $5.96 billion in Tesla shares based on the current stock price of $202.64 per share.
Chancellor Kathleen McCormick of the Delaware Chancery Court is tasked with determining the appropriate allocation of the compensation package towards attorney fees.
While Tesla and Musk retain the option to appeal the decision nullifying the CEO’s stock options, the plaintiff attorneys emphasized in their filing that they were not seeking the typical one-third of the verdict or settlement amount, citing established legal precedent.
Elon Musk expressed dissatisfaction with the lawyers’ demand, criticizing them on social media for seeking $6 billion despite what he perceives as their detrimental impact on Tesla.
In 2018, Richard Tornetta, a former heavy metal drummer and Tesla shareholder, initiated a lawsuit against the company, alleging that Musk had utilized his close connections with the board to secure an exorbitant pay package, resulting in a breach of fiduciary duties to shareholders. McCormick concurred with Tornetta’s arguments in January and invalidated Musk’s compensation package, prompting Musk to express frustration and advise against incorporating companies in Delaware.
Lead attorney Greg Varallo of Bernstein Litowitz Berger & Grossman, along with legal teams from Andrews & Springer and Friedman Oster & Tejtel, represented Tornetta. They acknowledged the unprecedented nature of their fee request but justified it by emphasizing the substantial benefit their efforts conferred upon Tesla.
Despite attempts to reach him for comment, Musk did not immediately respond to inquiries outside of regular working hours.
