By Tom Hals
WILMINGTON, Del. (Reuters) – The legal team that overturned Elon Musk’s record pay at Tesla deserves a tiny fraction of the $5.6 billion in legal fees it sought because their lawsuit brought little virtually no benefit to the company, the electric automaker argued Friday in court documents. .
Tesla said the legal team of Richard Tornetta, the shareholder whose lawsuit led to a January ruling voiding Musk’s $56 billion pay package, should be paid as little as $13.6 million for their work, which began with a complaint filed in 2018.
Musk’s compensation is the highest ever given to a CEO in the United States at least.
Tesla also said that if shareholders vote to ratify the canceled pay package at the company’s annual meeting next week, the main benefit of the lawsuit would be to have informed investors of the flawed negotiation process for the company. allocation of salaries so that they can then correct it with a new vote.
“Importantly, undisputed market evidence confirms that Plaintiff obtained little or no discernible value for Tesla or its shareholders,” Tesla said in its filing in Delaware Chancery Court.
The shareholder’s legal team consisted of three law firms, Bernstein Litowitz Berger & Grossmann and Friedman Oster & Tejtel, both based in New York, and Andrews & Springer of Wilmington, Delaware.
The objection to the legal fees comes as the company tries to rally shareholders behind a proposal to restore Musk’s pay package.
Tesla is also asking shareholders to approve moving the company’s legal headquarters to Texas, where its headquarters is located, from Delaware, something Musk lambasted after the pay decision.
Chancellor Kathaleen McCormick canceled the 2018 pay deal in January after finding after a trial that Musk had improperly dominated Tesla board negotiations to arrange the $56 billion in compensation, which she described as “unfathomable”.
The legal team that brought the case asked McCormick to order Tesla to pay them with about 29 million Tesla shares, part of the 266 million shares they said Musk would return to Tesla in reason for the cancellation of his salary.
Tesla argued that the decision did not result in any shares being returned to the company because Musk never exercised any of the stock options, the form of payment underlying his compensation.
Hundreds of Tesla shareholders have written to the company or the court opposing the legal fee request.
A shareholder with 19,000 shares, Amy Steffens, filed a formal objection to the fee request and is represented by the law firm Munger Tolles & Olson.
(Reporting by Tom Hals in Wilmington, Delaware; editing by Peter Henderson and Rod Nickel)
