Lawyers who were successful in having Tesla CEO Elon Musk’s $56 billion pay package voided by a court have requested nearly $6 billion as fees. Instead of requesting their fees be paid in cash, the lawyers are asking for it to be paid in Tesla (TSLA) shares, which would equate to about 29 million shares.
The claim follows a ruling by Judge Kathaleen McCormick of the Delaware Court of Chancery, which voided the 2018 compensation package awarded to Musk by Tesla’s board due to governance and fairness issues.
The lawyers’ fee was calculated as a share of the value restored to Tesla shareholders. Traditionally, attorneys in civil suits are compensated through a portion of cash settlements. However, in this instance, the legal team opted for stock in lieu of cash, a decision that aligns their compensation with the company’s stock performance and ensures no direct financial burden is placed on Tesla’s balance sheet.
This case has drawn significant attention due to the magnitude of Musk’s initial pay package, which was among the largest ever for a corporate executive. The legal challenge, initiated by shareholder Richard Tornetta, who holds 9 TSLA shares, argued that the pay package was excessively generous and not in the best interest of Tesla shareholders.
Ironically, the requested $6 billion in Tesla shares as legal fees would set a new benchmark for lawyer compensation in shareholder litigation. If approved, this fee would mark a historic payout, surpassing previous records for attorney fees in similar contexts.
Upon hearing of the requested fees, Musk responded on X by saying “they are evil.” Elon Musk is expected to appeal the initial ruling.
