Tesla contends that the lawyers responsible for axing Elon Musk’s $56 billion compensation package merit only a small portion of the $5.6 billion fee they requested, arguing that the lawsuit brought minimal advantage to the company. This position was articulated in court documents filed on Friday.
Richard Tornetta’s legal team, whose lawsuit led to the January decision to void Musk’s pay package, should receive as little as $13.6 million for their efforts, according to Tesla. The lawsuit originated with a 2018 complaint. Musk’s compensation package is the largest ever awarded to a CEO in the U.S.
Tesla argued that if shareholders choose to ratify the voided pay package at the forthcoming annual meeting, the lawsuit’s main contribution would be enlightening investors about the flawed negotiation process, enabling them to address it through a new vote.
“Importantly, undisputed market evidence confirms (the) plaintiff achieved little to no discernible value for Tesla or its stockholders,” Tesla asserted in its filing with the Delaware Court of Chancery, according to Reuters.
The legal team representing the shareholder consists of three firms: Bernstein Litowitz Berger & Grossmann, Friedman Oster & Tejtel, and Andrews & Springer.
This objection to the legal fee arises as Tesla seeks to gain shareholder approval to reinstate Musk’s pay package. Additionally, Tesla is requesting that shareholders endorse moving the company’s legal domicile to Texas, where its headquarters are located, from Delaware, which Musk criticized following the pay ruling.
🚨🇺🇸 RON BARON: ELON DESERVES EVERY PENNY OF THE $56 BILLION TESLA PAY PACKAGE
"Who sued? You had an individual who was a shareholder for hire with nine shares, and it took him five years to get the derivatives certified.
But a class action wasn't, so he doesn't really… pic.twitter.com/hIa3amhfh0
— Mario Nawfal (@MarioNawfal) June 5, 2024
In January, Chancellor Kathaleen McCormick voided the 2018 compensation agreement, concluding that Musk had improperly influenced Tesla’s board negotiations to secure the $56 billion package, which she described as “unfathomable.”
The legal team requested that McCormick order Tesla to compensate them with about 29 million Tesla shares, a fraction of the 266 million shares they claimed Musk would return to Tesla due to the voided compensation. Tesla countered that the ruling did not result in the return of any stock because Musk had not exercised any of the stock options that comprised his compensation.
Numerous Tesla shareholders have expressed objections to the legal fee request. Amy Steffens, a shareholder owning 19,000 shares, filed a formal objection and is represented by the Munger Tolles & Olson law firm.
Tesla’s annual shareholder meeting is set for Thursday, June 13, 2024.
