A Delaware judge was urged by attorneys to grant them Tesla shares, which is currently valued at about $6 billion, as payment for their successful defense of CEO Elon Musk’s illegal 2018 compensation package.
If a court authorizes the fee, it will shatter records for attorney paydays. Fees for attorneys handling class action lawsuits involving Enron were paid out in 2008.
Musk’s $56 billion compensation package from 2018 was revoked by the attorneys earlier, after the Delaware chancery court found that Tesla’s board of directors had not demonstrated that the payment was equitable to shareholders.
In a petition for fees and reimbursement of expenses submitted to that court on Friday, the lawyers contended that the amount would be appropriate considering the value they added to Tesla’s shareholders. Richard Tornetta, a former heavy metal drummer, initiated the lawsuit on behalf of other Tesla investors, and is represented by the attorneys.
The attorneys are requesting somewhat more than 29.4 million shares, or just over 11% of the Tesla shares that would have gone to Musk. With Tesla’s shares closing at $202.64 on Friday, the charge would have a $5.96 billion market value.
The attorneys stated that accepting their salary in Tesla stock shows that they are willing to “eat our cooking.”
“This structure avoids taking even a single penny from the Tesla balance sheet to pay fees and has the benefit of directly linking the award to the benefit created,” they continued. Additionally, Tesla deducts it from taxes.
It was mentioned that although Musk’s stock options had a five-year holding term beginning from the date he exercised them, the shares they are requesting would be freely tradeable.
Nevertheless, the attorneys claimed that the roughly $6 billion in shares entitled them to 33% of the “quantifiable conferred benefit” under Delaware law, making them “conservative.”
They said, “However, in an attempt to be conservative, Plaintiff’s Counsel does not seek the 33%” justified by earlier rulings.
