A Tesla shareholder is calling for more than $7 billion in lawyers’ fees to be paid by the electric car maker, after he successfully challenged Elon Musk’s record-breaking pay package.
Richard Tornetta, who owned nine shares in Tesla when he sued over Musk’s pay package in 2018, is pursuing the legal fee on behalf of three law firms that represented him in a battle he ultimately won in January when Musk’s $56 billion package was voided by a judge in Delaware.
The proposed fee is valued at about $7.3 billion at Tesla’s Monday stock price and amounts to a rate of roughly $370,000 for every hour worked by the 37 lawyers, associates and paralegals involved in the case, according to court documents submitted by Tornetta’s lawyers.
Legal teams for Tornetta and Tesla clashed in court on Monday over the value of the lawsuit. Tornetta’s lawyers argue they deserve the fee as a cut of the benefit they say they delivered to Tesla.
Robert Jackson, a former commissioner at the Securities and Exchange Commission, told Delaware’s Court of Chancery that the ruling was worth $51 billion in the form of returned stock to Tesla that had been reserved for Musk’s options.
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Tornetta’s attorneys argued they should receive a fee equal to 11 per cent of that judgment. They want to be paid in the form of 29 million Tesla shares.
More than 8,000 Tesla stockholders have sent 1,500 letters and objections over the fee, according to court documents.
Tesla shareholders in June voted to reinstate Musk’s pay, giving the company ammunition to appeal against Judge Kathaleen McCormick’s ruling in January which voided the proposed package.
Tesla argues that Musk’s pay package has been restored after the latest shareholder vote and that Tornetta’s legal victory has been transformed into a loss. As a result, the case conveyed no benefit to Tesla and the shareholder lawyers should receive as little as $13.6 million, according to Tesla.
The hearing continues.
