The lawyers who successfully challenged Tesla boss Elon Musk’s $56 billion remuneration are charging the car maker $6 billion for it. The fee corresponds to an hourly rate of $288,888 and should be paid in the form of Tesla shares, the three law firms explained in a written submission to the chancery court in Delaware that became known on Friday (local time).
“We are aware that the fee demanded is unprecedented in its absolute level.” Musk called the demand for X “criminal.” At the end of January, a judge in Delaware described Musk’s compensation package as an “unbelievable sum” and declared it invalid. The $56 billion compensation consisted of stock options that allowed Musk to buy Tesla shares at a greatly reduced price. Tesla shareholder Richard Tornetta sued against this. He accused the electric car manufacturer of saying that the goals tied to the billion-dollar package that Musk was supposed to meet were too easy to achieve. Tesla therefore has a right to have the compensation package reversed.
According to Tornetta’s lawyers, Tesla should now pay for her fee. The company could cover the fees since it benefited from the return of Musk’s salary package. “This structure has the advantage that the compensation is directly linked to the benefits created and not even a cent is taken from Tesla’s balance sheet to pay fees,” the lawyers wrote. Tesla can also deduct their fees from taxes.
The shareholder’s legal team consists of three law firms: Bernstein Litowitz Berger & Grossmann and Friedman Oster & Tejtel, both based in New York, and Andrews & Springer of Wilmington. They have catapulted themselves to the top of the fee claims in shareholder lawsuits in the USA. The highest fee so far was the $688 million demanded in 2008 for the legal team that secured a $7.2 billion settlement after the accounting fraud scandal at the energy company Enron.