Lawyers who played a pivotal role in overturning a substantial pay package for Tesla CEO Elon Musk have petitioned the presiding judge in Delaware to grant them company stock valued at $5.6 billion as legal fees.
The attorneys, representing Tesla shareholders in the case resolved in January, submitted the request to the Delaware judge through court documents filed on Friday.
If approved, this proposed award would notably stand as one of the largest such payouts in legal history. For context, attorneys in class-action suits stemming from the Enron collapse received a record $688 million in legal fees in 2008.
In their court filing, the Tesla plaintiff attorneys asserted their readiness to accept the proposed compensation, emphasizing their five-year-long, contingency-based work. They underscored the substantial benefit to Tesla, stating they operated on a risk-reward basis, with the potential for no compensation if the case had been lost.
The requested award amounts to 11% of the Tesla stock—estimated at around $55 billion—that Musk had pursued in the contested compensation package. Judge Kathaleen St. Jude McCormick deemed the arrangement illegal in January.
The attorneys pointed out that their request does not impact Tesla’s financial position, as it involves company stock, which also carries the benefit of being tax-deductible. Additionally, they are seeking $1.1 million to cover expenses incurred during the litigation process.
Judge McCormick’s ruling sided with the shareholder lawyers’ contention that Musk personally orchestrated the 2018 pay package through contrived negotiations with non-independent directors, which would have significantly increased his stake in Tesla to nearly double his current holdings of 13%.
