DOVER, Del. — The lawyers who successfully argued that a huge pay package for Tesla CEO Elon Musk was illegal and should be annulled have asked the president to award them company shares worth $5.6 billion as legal fees.
The attorneys, who represented Tesla shareholders in the case decided in January, made the Delaware judge’s request in the lawsuits filed Friday.
If approved, this amount would apparently be by far the largest reward. Lawyers in class action lawsuits arising from Enron’s collapse were awarded a record $688 million in legal fees in 2008.
“We are ‘prepared to eat our cooking,’” the Tesla plaintiff’s attorneys wrote in the lawsuit, arguing that the amount is justified because they have operated purely on a contingency basis for more than five years. If they had lost, they would have gotten nothing. The benefit to Tesla “was enormous,” they said.
The requested reward represents 11% of the Tesla shares — worth about $55 billion — that Musk sought in the compensation package, which Judge Kathaleen St. Jude McCormick ruled illegal in January.
Not only does the request not take away from the electric car company’s balance sheet, it is also tax deductible, the lawyers argued. They are also seeking $1.1 million in expenses.
In her ruling, Judge McCormick accepted shareholder lawyers’ argument that Musk personally dictated the landmark 2018 pay package in sham negotiations with non-independent directors.
It would have nearly doubled Musk’s stake in Tesla. He currently owns 13%.