Judge in Elon Musk Pay Package Case to Consider $6 Billion Attorney Fees

• Lawyers who objected to Elon Musk’s multibillion-dollar salary have asked for $6 billion in fees.
• Tesla shareholders have voted to reapprove Elon Musk’s massive multibillion-dollar compensation package.
• A Delaware judge said she would consider attorneys’ fees regardless of how shareholders vote.

A Delaware judge still wants to consider a request for $6 billion in legal fees from lawyers who rejected Elon Musk’s multibillion-dollar compensation plan at Tesla, regardless of the recent shareholder vote, show court documents.

In January, Delaware Chancellor Kathleen McCormick ruled against Elon Musk’s pay package that would have given the Tesla CEO more than $55 billion in stock.

“The process leading to approval of Musk’s compensation plan was deeply flawed,” McCormick wrote in his ruling, pointing to a conflict of interest on Tesla’s board of directors, which decides the compensation plan and includes Musk’s brother as a member.

Following this outcome, lawyers representing Richard Tornetta, the Tesla shareholder who opposed the compensation plan, argued that they had performed a valuable service by obtaining the cancellation of Musk’s compensation plan. This value? About $6 billion worth of Tesla stock.

Musk, at the time, called the request “criminal.”

But Musk received some good news in June after shareholders voted to reapprove the CEO’s salary and maintain the current board structure with Kimbal and James Murdoch.

The vote does not immediately reinstate his compensation plan, but it gives an additional boost to the arguments of Tesla’s lawyers.

As a result, Tesla’s defense team filed a motion on June 20, arguing that the shareholder ratification vote justifies granting stock options to Musk.

“Defendants argue that the consequences of ratification alter the course of this litigation and any relief potentially available (and, therefore, any attorneys’ fees that might be awarded to plaintiff’s counsel),” Tesla’s lawyers wrote.

Chancellor McCormick will have to decide the fate of the case and whether the plaintiff’s lawyers TO DO deserve approximately $6 billion in legal fees.

In response to the Tesla defense team’s request, McCormick wrote in a document that she wanted to hold a hearing on legal fees without taking into account the shareholder vote, since a separate meeting will be held to consider the impact of this vote.

“Given that we will be holding separate oral argument devoted solely to the issues raised by the shareholder vote, for purposes of the July 8 hearing, the parties are invited to argue the points in dispute without regard to the shareholder vote,” a writes McCormick. . “All arguments regarding the shareholder vote will be deemed preserved.”

James Park, a securities regulation expert at the University of California, Los Angeles, told Business Insider that the impact of the shareholder vote is crucial in considering the overall value of the litigation that overturned the compensation in the first place.

“My only thought is that the defendant is correct that it would be difficult to assess the benefit of the litigation, which is necessary to assess the fee request, without considering the impact of the shareholder ratification vote,” he wrote in an email.

Park said McCormick’s response likely indicates she is “preserving her options.”

Lawyers for Tesla and Tornetta, the plaintiff, did not respond to a request for comment.