In a recent development that has sent shockwaves through the financial world, the legal representatives responsible for nullifying Elon Musk’s $56 billion compensation are now seeking an unprecedented $6 billion in legal fees. This surprising request, outlined in a filing with the Court of Chancery in Delaware, is drawing attention for its sheer magnitude.
To understand the gravity of this situation, let’s rewind a bit. Elon Musk’s eye-watering $56 billion compensation package faced a legal challenge, leading to its nullification by a Delaware judge earlier this year.
Fast forward to the present, and the legal team behind the challenge is making headlines once again. They are seeking a staggering $6 billion in legal fees, to be paid by Tesla in the form of the company’s stock. The hourly rate associated with this request is an astonishing $288,888. The law firms involved acknowledge the unprecedented nature of this fee but argue that it is justified given the circumstances.
Unsurprisingly, Elon Musk didn’t hold back in expressing his discontent. On his X platform, he labeled the request as “criminal,” emphasizing that the lawyers, in his view, did nothing but harm to Tesla (NASDAQ:TSLA). As of now, Tesla and Musk’s legal counsel have not issued any official responses to this substantial fee request.
The legal team justifies this substantial fee by pointing out that Tesla benefited from the return of Musk’s pay package, resulting in the return of 266 million shares to the electric carmaker. They argue that the fee, proposed to be in stock, won’t impact Tesla’s balance sheet and is, in fact, tax-deductible for the company.
Judge Kathaleen McCormick, overseeing the case, had previously referred to Musk’s pay as “unfathomable.” The possibility of Tesla contesting this fee is on the table, especially considering a similar fee request in a case involving the pay of its directors.
This request for fees is not just making waves in Tesla’s world; it’s also notable in the broader legal landscape. The Delaware Supreme Court is currently reviewing an appeal for a $267 million fee in a case involving Dell Technologies. In the realm of shareholder cases, the requested fee is substantial, equating to about 11% of the judgment.
The unfolding saga of Elon Musk’s compensation takes an unexpected turn with this audacious legal fee request. As the legal battle continues, the implications for Tesla and its shareholders remain uncertain. The financial world watches closely as this unprecedented chapter in executive compensation unfolds.
