Elon Musk, owner of Tesla and
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Lawyers who invalidated Elon Musk's $56 billion compensation as excessive on Friday sought a record $6 billion in legal fees, to be paid in shares of the electric car maker.
“We recognize that the fees requested are unprecedented in absolute magnitude,” the three law firms said in a filing with the Delaware Court of Chancery.
They said fees amount to an hourly rate of $288,888.
Musk criticized the request as “criminal,” posting on his X platform that “lawyers who have done nothing but hurt Tesla want $6 billion.”
Tesla Musk's lawyer did not immediately respond to requests for comment.
The company will pay lawyers representing Richard Tornetta, the shareholder who sued Musk in 2018 over the pay package, which a Delaware judge invalidated in January.
The electric car maker is being asked to pay the fees because it benefited from the return of Musk's pay package, which the legal team said would result in 266 million shares being returned to the automaker.
“This structure has the advantage of tying the award directly to the benefit created and avoids taking a dime off Tesla’s balance sheet to pay the fee,” the lawyers wrote, adding that the fee would be tax deductible to Tesla.
Judge Kathleen McCormick, who is overseeing the case and will decide the fees, called Musk's pay “unfathomable” in her ruling.
The company may object to the fees, as it has a fee request in a similar case related to the wages of its directors.
The largest settlements in shareholder cases have occurred in federal court. The largest fee was $688 million in 2008 for the legal team that obtained a $7.2 billion settlement in a securities fraud case over the Enron failure.
Tesla's fee request comes as the Delaware Supreme Court hears an appeal of $267 million in fees in a case that was settled for $1 billion related to… Dell Technologies.
Delaware judges said that pursuing cases deeper into litigation, through depositions and toward trial, should have a higher recovery rate to reflect the risk and effort. Musk's pay case went to a one-week trial.
Opponents of this approach say that as the volume of settlements and judgments grows, lawyers must collect a decreasing percentage to avoid excess compensation. The legal team said the requested fees amounted to approximately 11% of the ruling.
Musk's pay package consisted of stock options that allowed him to buy Tesla shares at deeply discounted prices and required him to hold the shares for five years. The legal team said they were looking for shares without restrictions on selling them.
The shareholders' legal team consists of three law firms, Bernstein Litowitz Berger & Grossman and Friedman Oster & Tegtel, both based in New York, and Andrews & Springer of Wilmington.
