Tesla argued in court papers on Friday that the legal team voiding Elon Musk’s record Tesla pay package deserves only a tiny fraction of the $5.6 billion legal fee they requested, claiming their lawsuit provided almost no benefit to the company.
Tesla (TSLA.O) stated that the legal team for Richard Tornetta, the shareholder whose lawsuit led to a January ruling voiding Musk’s $56 billion pay package, should receive as little as $13.6 million for their work, which began with a 2018 complaint.
Musk’s remuneration is the highest ever granted to a CEO in the U.S.
Tesla contended that if shareholders vote to ratify the voided pay package at the company’s annual meeting next week, the lawsuit’s main benefit was to inform investors of the flawed negotiation process for awarding pay so they could 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 stated in its filing with the Delaware Court of Chancery.
The shareholder’s legal team comprises three law firms: Bernstein Litowitz Berger & Grossmann, Friedman Oster & Tejtel, both based in New York, and Andrews & Springer of Wilmington, Delaware.
Tesla’s 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 criticized after the pay ruling.
Chancellor Kathaleen McCormick voided the 2018 pay deal in January, finding after a trial that Musk improperly dominated 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 they claimed 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 underlying his compensation. Hundreds of Tesla shareholders have written to the company or 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.
