still have a question Elon Musk. Tesla shareholders are expected to argue in court today that the company’s request for more than $7 billion in legal fees is simply “outlandish” and should be rejected. It’s the latest twist in the legal showdown over Musk’s $56 billion pay package, and shares of the Palo Alto automaker fell more than 1% in early trading Monday. But let’s recap the story.
Tesla: Legal fees set a record. Who asked for them?
Investor Richard Tornetta, who is represented by three major law firms including Bernstein Litowitz Berger & Grossmann, owned nine Tesla shares when he filed his lawsuit against the company. Stock Option Packages In 2018, Musk won a legal battle after canceling the package in January.
Request Now Record expenses. Based on Tesla’s share price on Friday, the fees equate to about $7.2 billion, or about $370,000 an hour for 37 lawyers, partners and solicitors, some of whom now typically charge as little as $275 an hour, according to court documents filed by Tornetta’s attorneys.
In short, the case involves so many people that a hearing scheduled for Monday was moved from the usual McCormick courtroom to the largest courtroom in the building to accommodate 47 attorneys from 19 law firms involved in the case, as well as potential shareholders. Tornetta’s lawyers argued that they deserved the fees as part of the benefits they passed on to Tesla when the judge rejected Musk’s compensation plan, which returned about 266 million shares reserved as stock options to Tesla. At Friday’s price of $251.82 per share, those shares are worth about $67 billion.
Tornetta’s lawyers said it was the largest amount ever awarded by a U.S. court, not including punitive damages. They claim they should be awarded compensation equal to 11% of that sentence. And demanded payment of 29 million Tesla shares.
Elon Musk’s Defense
Tesla objects to the arguments of Tornetta’s legal team. The electric car maker argues that the shareholder legal team should only be paid about $13.6 million for its work, Reuters reported.
“The legal fees appear to be grossly disproportionate and inappropriate,” he wrote Nathan ZhaoTesla shareholders from New Jersey filed the request with Chancellor Kathaleen McCormick in March, according to a court filing. Chiu, the California Public Employees’ Retirement System and more than 8,000 Tesla shareholders filed about 1,500 letters and objections in Delaware Chancery Court, according to court filings.