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Tesla objects to $5.6 billion payout for lawyers who voided Musk's pay
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Tesla objects to $5.6 billion payout for lawyers who voided Musk's pay
Jun 7, 2024 10:57 AM

WILMINGTON, Delaware, June 7 (Reuters) - The legal team

that voided Elon Musk's record Tesla pay package deserves a tiny

fraction of the $5.6 billion legal fee they requested because

their lawsuit provided almost no benefit for the company, the

electric automaker argued in court papers on Friday.

Tesla said the legal team for Richard Tornetta, the

shareholder whose lawsuit led to a January ruling voiding Musk's

$56 billion pay package, should be paid as little as $13.6

million for their work, which began with a 2018 complaint.

Musk's remuneration is the most ever granted to a CEO in the

U.S. at least.

Tesla also said if shareholders vote to ratify the voided

pay package at the company's annual meeting next week, then the

lawsuit's main benefit was to have informed investors of the

flawed negotiation process for awarding pay so they could then

correct it with a new vote.

"Importantly, undisputed market evidence confirms (the)

plaintiff achieved little to no discernible value for Tesla or

its stockholders," Tesla said in its filing with the Delaware

Court of Chancery.

The shareholder's legal team comprised three law firms,

Bernstein Litowitz Berger & Grossmann and Friedman Oster &

Tejtel, both based in New York, and Andrews & Springer of

Wilmington, Delaware.

The objection to the legal fee comes as the company tries to

rally shareholders to back a proposal to restore Musk's pay

package.

Tesla is also asking shareholders to approve moving the

company's legal home to Texas, where it has its headquarters,

from Delaware, which Musk lambasted after the pay ruling.

Chancellor Kathaleen McCormick voided the 2018 pay deal in

January because she found after a trial that Musk improperly

dominated the Tesla board negotiations to arrange the $56

billion compensation, which she described as "unfathomable."

The legal team that brought the case asked McCormick to

order Tesla to pay them with about 29 million Tesla shares as a

portion of the 266 million shares that they said Musk would

return to Tesla as a result of his pay being voided.

Tesla argued that the ruling did not result in the return of

any stock to the company because Musk never exercised any of the

stock options, the form of payment underlying his compensation.

Hundreds of Tesla shareholders have written to the company

or to the court to object to the legal fee request.

One shareholder with 19,000 shares, Amy Steffens, filed a

formal objection to the fee request and is represented by the

Munger Tolles & Olson law firm.

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