Following a successful lawsuit that forced Tesla’s board of directors to return over $700 million in what was labelled as excessive compensation, the legal team responsible for the victory is now seeking fees that most would consider excessive – $229 million.
This request was filed on September 8th in Delaware’s Court of Chancery, equating to an astounding $10,690 per hour of legal work. If approved, this fee award would set a new record for shareholder lawsuit payouts against a board, dwarfing previous cases in terms of magnitude, reports Reuters.
The proposed sum would be divvied up among lawyers from four firms who spent years constructing the case against Tesla’s director compensation between 2017 and 2020. This legal fee, along with the underlying settlement, has not yet been approved and awaits the green light from a Delaware judge, with a hearing to determine how much they will get paid scheduled for October.
In the lawsuit the 12 director defendants, including well-known figures like James Murdoch and Larry Ellison, agreed to return $735 million in compensation, as well as relinquishing an additional potential $184 million. They also pledged to overhaul the way director pay is determined, benefitting Tesla shareholders indirectly, in what is known as a derivative lawsuit.
The law firms behind this legal case estimate the total settlement value at $919 million, and are requesting 25% of that as their fee. If this hefty fee wasn’t enough, they are also seeking about $1 million to cover expenses.