Lawyers who successfully argued that a massive pay package for Tesla CEO Elon Musk was illegal and should be voided have requested the presiding judge to award them company stock worth $5.6 billion as legal fees. The attorneys, who represented Tesla shareholders in the case decided in January, made the request of the Delaware judge in court papers filed Friday.
The amount would apparently be the largest such award, if approved, surpassing the $688 million legal fees awarded in a class-action suit related to the collapse of Enron in 2008. The Tesla plaintiff attorneys justified their request by highlighting that they worked on a contingency basis for over 5 years, risking receiving nothing if they had lost the case. They emphasized that the benefit to Tesla from their efforts was substantial.
The requested award represents 11% of the Tesla stock, valued at around $55 billion, that Musk was seeking in the compensation package deemed illegal by Judge Kathaleen St. Jude McCormick in January. The attorneys clarified that their request would not impact Tesla's balance sheet and could be tax deductible. Additionally, they are seeking $1.1 million in expenses.
In her ruling, Judge McCormick agreed with the shareholder lawyers' argument that Musk had orchestrated the 2018 pay package in non-independent negotiations with directors, deeming it a sham. The package would have significantly increased Musk's stake in Tesla, which currently stands at 13%.
