Following a high-profile legal battle over the multi-billion dollar compensation package of Tesla-CEO Elon Musk, the lawyers involved are now demanding a record fee. Three law firms, which filed a lawsuit on behalf of a shareholder against Musk's 56 billion dollar remuneration package, are demanding Tesla a total of seven billion dollars.
The background to the legal dispute
In 2018, the Tesla-investor Richard Tornetta filed a lawsuit against the gigantic remuneration package for Elon Musk. Tornetta, who had only nine Tesla-shares, argued that Musk's salary package was excessive. The case eventually reached the court in Delaware, which overturned Musk's remuneration package in January 2023, representing a significant legal victory for the plaintiff side.
The fee claim
According to the court documents published on Monday, the plaintiff's lawyers are demanding a sum of seven billion dollars. This equates to an hourly rate of around 370,000 dollars for each hour worked by the 37 attorneys, staff and law clerks involved. The lawyers argue that such a high fee would encourage other law firms to work to protect small investors.
Reactions to the claim
Tesla-Attorney John Reed described the claim as a "real lawyer's joke" and argued for a significantly lower sum of 13.6 million dollars. Elon Musk also expressed his criticism and called the lawyers' demands "criminal". He had already rejected a claim of six billion dollars in March and emphasized that the lawyers had done nothing other than Tesla to harm.
The legal framework
The attorneys' fees sought represent a portion of the value that plaintiffs' attorneys say was created by the Delaware judge's decision. Attorney Greg Varallo emphasizes that the shareholder's legal team is asking for significantly less than the 33 percent maximum allowed by law. More than 8000 Tesla-shareholders had protested against the high remuneration in around 1,500 letters and objections.
Outlook
Judge McCormick's decision on the fees is expected in the coming weeks or months. This ruling could have far-reaching consequences for future shareholder lawsuits and the remuneration of executives in listed companies.
With this development, the case surrounding Elon Musk's compensation package remains a significant example of the influence of shareholder litigation and the role of the judiciary in the corporate sector. The fees claimed and the final judgment will be closely watched as they could have a lasting impact on the dynamic between company management and shareholders.
