The Lawyers Who Fought Against Elon Musk's Pay Package Are Asking $370,000 an Hour in Legal Fees: 'We Did Battle With the Very Best' They say that their request is modest when compared to the norm in Delaware.
By Sherin Shibu Edited by Melissa Malamut
Key Takeaways
- The lawyers who argued against Tesla CEO Elon Musk's $56 billion pay (and won the case in a Delaware court in January) are now asking for pay of their own.
- The fee would amount to about $7.3 billion in Tesla stock, or about $370,000 for each hour worked.
- Over 8,000 Tesla stockholders have sent letters and objections to the court over the fees.
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The legal team that argued against Tesla CEO Elon Musk's record-high pay package now wants to get paid — a record-setting $7.3 billion in legal fees.
There were 37 lawyers, associates, and paralegals helping represent Richard Tornetta, the Tesla shareholder who sued the EV maker over Musk's proposed $56 billion pay. Tornetta won in Delaware court in January, with Delaware judge Kathaleen McCormick throwing out the compensation package.
In response, Tesla held another shareholder vote in June and argued that Musk's compensation was "not about the money" but rather about keeping his attention on the company.
Shareholders ultimately voted in favor of the compensation plan and an additional resolution to move Tesla's legal headquarters from Delaware to Texas.
On Monday, McCormick heard from both Tornetta's legal team and Tesla's over the legal fee request.
Tornetta's attorneys presented arguments and expert-witness testimony to show why they deserved $7.3 billion in legal fees, consisting entirely of Tesla stock. At Monday's stock price, the fee works out to about $370,000 for each hour worked.
Their justification was similar to the one Tesla gave for Musk's pay: It's not just about the money, it's about incentives for future behavior.
"If Delaware continues to perceive value in policing bad behavior, then narrowing incentives [for attorneys] would be a very bad idea," Bernstein Litowitz Berger & Grossman partner Greg Varallo said.
Related: Elon Musk's Proposed $56 Billion Pay Package Is 'Obviously Not About the Money,' Writes Tesla Chair
The attorneys stated that instead of the usual 33% fee recovery that Delaware permits, they are asking for a smaller 11% of the Tesla shares that would have gone to Musk — had the judge not voided his pay. They said they wanted "a slice of the value pie" they "created."
"We did battle with the very best," Varallo said. "Litigation against Tesla is never easy. There are companies who play by the rules every day, and then there are companies like Tesla."
Tesla lawyer John Reed told McCormick that the fee request "looks like a real-life lawyer joke."
Elon Musk. (Photo by Scott Olson/Getty Images)
Reed said that the January ruling caused Tesla stock to dip and cast doubt on Musk's future at the EV maker. Though Tesla stock did fall after January, the EV maker is up overall since January at the time of writing.
Reed asked that Tornetta's attorneys receive a $13.6 million fee.
Court documents show that over 8,000 Tesla stockholders have sent letters and objections to the court about the legal fees.
If approved, the legal fee would be the highest in U.S. corporate history, more than the $688 million awarded in an Enron class action suit in 2008.
Related: How Much Are CEOs Paid? Highest Chief Executive Pay Packages
