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

“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 that outcome, lawyers representing Richard Tornetta, the Tesla shareholder who opposed the compensation plan, argued that they had performed a valuable service in getting Musk’s compensation plan overturned. That value? About $6 billion worth of Tesla stock.

At the time, Elon Musk called the request “criminal.”

But Musk got 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 its compensation plan, but it gives Tesla’s lawyers’ arguments an additional boost.

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

“Defendants contend that the consequences of ratification alter the course of this litigation and any relief potentially available (and, therefore, the attorney’s fees that might be awarded to Plaintiff’s counsel),” lawyers for You’re here.

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

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

“Because we will hold 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 issues in dispute without regard to the shareholder vote,” McCormick wrote. “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 when considering the overall value of the litigation that initially overturned the salaries .

“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.