By Tom Hals
WILMINGTON, Delaware (Reuters) – The legal team that voided Elon Musk’s record Tesla pay package deserves a small share of the $5.6 billion legal fees they sought because their lawsuit provided virtually no benefit to the company, argued the electric car manufacturer in lawsuits on Friday. .
Tesla said the legal team of Richard Tornetta, the shareholder whose January lawsuit led to a ruling invalidating Musk’s $56 billion pay package, should be paid just $13.6 million for their work, which began with a complaint from 2018.
Musk’s pay is the highest ever awarded to a CEO in the US.
Tesla also said that if shareholders vote to ratify the voided pay package at the company’s annual meeting next week, the key benefit of the lawsuit was to inform investors of the flawed wage award negotiation process so they could then correct it with a new mood.
“Importantly, undisputed market evidence confirms that Plaintiff has achieved little to no discernible value to Tesla or its shareholders,” Tesla said in its filing with the Delaware Court of Chancery.
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 fee comes as the company tries to convince shareholders to support a proposal to restore Musk’s pay package.
Tesla is also asking shareholders to approve moving the company’s legal home to Texas, where its headquarters are located, from Delaware, which Musk criticized after the pay ruling.
Chancellor Kathaleen McCormick annulled the 2018 pay deal in January because she found after a lawsuit that Musk improperly dominated negotiations at Tesla’s board to settle the $56 billion compensation deal, which she described as “unfathomable.”
The legal team that brought the case asked McCormick to order Tesla to pay them with approximately 29 million Tesla shares as part of the 266 million shares they said Musk would return to Tesla as a result of the annulment of his wage.
Tesla argued that the ruling did not result in the return of shares 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 to object to the request for legal fees.
One shareholder with 19,000 shares, Amy Steffens, has formally objected to the compensation request and is represented by law firm Munger Tolles & Olson.
(Reporting by Tom Hals in Wilmington, Delaware; Editing by Peter Henderson and Rod Nickel)
