Lawyers representing a Tesla shareholder have requested nearly $6 billion worth of Tesla stock following a successful legal battle that resulted in Elon Musk’s $55-billion compensation package being deemed undeserved by a Delaware court. The attorneys argue that a portion of the invalidated compensation package should be allocated to them as attorney fees, amounting to approximately 11% of the total pay package. Based on the current stock price of $202.64 per share, this translates to about $5.96 billion worth of Tesla shares.
Legal Battle Outcome and Next Steps
Following the court’s decision to void Elon Musk’s stock options, Chancellor Kathleen McCormick of the Delaware Chancery Court must now determine the appropriate allocation of the compensation package towards attorneys’ fees. While Tesla and Musk retain the option to appeal the ruling, the plaintiff’s attorneys are pressing for their share of the compensation package, emphasizing the substantial time and resources dedicated to litigating the case over six years.
Musk’s Response and Legal Background
Elon Musk expressed dissatisfaction with the attorneys’ demand, characterizing it as “criminal” in a post on social media. The legal dispute stemmed from a lawsuit filed by Richard Tornetta, a Tesla shareholder, who alleged that Musk’s compensation package was secured through undue influence on the company’s board members, breaching fiduciary duties to shareholders. In January, Chancellor McCormick sided with Tornetta, invalidating Musk’s pay package and prompting his critical remarks regarding incorporating companies in Delaware.
Attorney’s Position and Record-Breaking Request
Lead attorney Greg Varallo of Bernstein Litowitz Berger & Grossman, representing Tornetta, defended the unprecedented request for attorney fees, citing the significant benefit achieved for Tesla shareholders. While acknowledging the extraordinary nature of the requested fee, Varallo emphasized the immense value of the outcome secured through years of litigation. The plaintiff’s legal team, including firms Andrews & Springer and Friedman Oster & Tejtel, stands firm in their demand for compensation.
Conclusion: Legal Ramifications and Ongoing Dispute
The legal battle surrounding Elon Musk’s compensation package underscores the complexities of corporate governance and shareholder rights in high-profile cases. As the court deliberates on the allocation of attorney fees, the outcome will not only impact the involved parties but also set precedents for future shareholder lawsuits and executive compensation disputes. Musk’s contentious relationship with the legal system continues to attract attention, highlighting the intersection of corporate power, accountability, and legal advocacy in the modern business landscape.
