Lawyers Seek $5.6 Billion in Tesla Stock as Legal Fees for Musk Pay Package Case
The lawyers who successfully argued that a massive pay package for Tesla CEO Elon Musk was illegal and should be voided have asked the presiding judge to award them company stock worth $5.6 billion as legal fees.
Request for $5.6 Billion in Tesla Stock as Legal Fees
The lawyers who represented Tesla shareholders in the case against Elon Musk's pay package have filed court papers asking for company stock worth $5.6 billion as legal fees.
In the court filing, the attorneys justified the requested sum by highlighting that they worked on a contingency basis for over 5 years. They also acknowledged that if they had lost the case, they would have received nothing. They believe their work benefited Tesla massively.
This requested award represents 11% of the Tesla stock, which is valued at approximately $55 billion, that Musk was seeking in the compensation package declared illegal by Judge Kathaleen St. Jude McCormick in January.
Tax Deductible and No Impact on Tesla's Balance Sheet
The lawyers also argued that the requested award would not affect Tesla's balance sheet since it represents stock and not cash. Additionally, they highlighted that this award would be tax deductible.
In addition to the stock award, the attorneys are seeking $1.1 million in expenses as part of their legal fees.
Judge McCormick's ruling in January supported the arguments made by the shareholder lawyers, stating that Musk had personally influenced the 2018 pay package through sham negotiations with non-independent directors. This package would have significantly increased Musk's stake in Tesla.
Largest Legal Fee Award Requested in History
If approved, the request for $5.6 billion in Tesla stock as legal fees would be the largest award of its kind. Comparatively, lawyers in class-action suits related to the Enron collapse received a record $688 million in legal fees in 2008.
The attorneys involved in the Musk pay package case believe that their request is fair and justified considering the extensive work they put into the case on a contingency basis. They are 'prepared to eat their cooking' and are confident in the benefits their work brought to Tesla and its shareholders.
The presiding judge in Delaware will consider the request and make a decision regarding the requested award.
