Judge to consider $6 billion legal fees for lawyers who canceled Elon Musk’s multi-billion paycheck

• Lawyers who opposed Elon Musk’s multibillion-dollar payment have sought $6 billion in fees.

• Tesla shareholders voted to reapprove Elon Musk’s massive multi-billion dollar compensation plan.

• 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, Chancellor Kathleen McCormick of the Delaware Chancery Court ruled against Elon Musk’s pay package, which 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 among its members.

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 got some good news in June after shareholders voted to reapprove the CEO’s pay package 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, claiming that the shareholders’ ratification vote justified the grant of stock options to Musk.

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

Chancellor McCormick will have to decide the fate of the package and whether the plaintiff’s lawyers TO DO deserve about $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.

“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 in considering the overall value of the litigation that overturned the pay 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.

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