Tesla opposes $5.6 billion payout to lawyers who invalidated Musk’s pay By Reuters
Tom Hals
WILMINGTON, Del. (Reuters) – The legal team that invalidated Elon Musk’s record Tesla (NASDAQ:) pay package is entitled to only a fraction of the $5.6 billion in legal fees they requested, the electric car maker argued. Court filings Friday.
Tesla said the legal team of Richard Tornetta, the shareholder who filed the lawsuit following the January ruling invalidating Musk’s $56 billion pay package, should be paid at least $13.6 million for work that began with his 2018 complaint.
Musk’s compensation is at least the highest ever paid to an American CEO.
Tesla also said that if shareholders vote to approve the invalidated pay package at the company’s annual meeting next week, the main benefit of the lawsuit would be to alert investors to the flawed negotiation process for payouts, which could be fixed with a new vote.
“Importantly, compelling market evidence confirms that Plaintiffs have achieved little or no discernible value to Tesla or its shareholders,” Tesla said in a filing with the Delaware Commercial Court.
The shareholder’s legal team consisted of three law firms: Bernstein Litowitz Berger & Grossmann and Friedman Oster & Tejtel, both based in New York, and Andrews & Springer, based in Wilmington, Delaware.
The objection over legal costs comes as the company seeks to rally shareholders to support a proposal to restore Musk’s pay package.
Tesla is also asking shareholders to approve moving the company’s legal home from Delaware to Texas, where it is headquartered, a move that Musk has lambasted after the wage ruling.
Prime Minister Catherine McCormick (NYSE:) in January invalidated Musk’s 2018 pay deal because she found after a trial that he had improperly dominated Tesla board negotiations and arranged a $56 billion payout. She described it as “unfathomable.”
The legal team that filed the suit asked McCormick to pay Tesla about 29 million shares, part of the 266 million shares that Musk said would be voided and returned to Tesla.
Tesla argued that the ruling did not return any stock to the company because Musk never exercised any of the stock options that formed the basis of his compensation.
Hundreds of Tesla shareholders have sent letters to the company or the court opposing any request for legal fees.
Amy Steffens, one of the shareholders with 19,000 shares, filed a formal objection to the fee request and is represented by the law firm Munger Tolles & Olson.
