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Dover, Del. –
The lawyers who successfully argued that a massive pay package for Tesla CEO Elon Musk was illegal and should be voided have asked the presiding judge to award them company stock worth US$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 far and away the largest such award, if approved. Lawyers in class-action suits stemming from the collapse of Enron got a record US$688 million in legal fees in 2008.
“We are ‘prepared to eat our cooking,’” the Tesla plaintiff attorneys wrote in the court filing, arguing the sum is justified because they worked purely on a contingency basis for more than 5 years. If they lost they would have gotten nothing. The benefit to Tesla “was massive,” they said.
The requested award represents 11 per cent of the Tesla stock — worth some US$55 billion — that Musk was seeking in the compensation package, which Judge Kathaleen St. Jude McCormick ruled illegal in January.
Not only does the request take nothing from the electric car company’s balance sheet, it is also tax deductible, the attorneys argued. They are also seeking US$1.1 million in expenses.
In her ruling, Judge McCormick accepted the shareholder lawyers’ argument that Musk personally dictated the landmark 2018 pay package in sham negotiations with directors who were not independent.
It would have nearly doubled Musk’s stake in Tesla. He currently holds 13 per cent.
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