Lawyers seek nearly $6 billion in Tesla stock after getting Musk pay package struck down

lawyer Asked a Delaware judge to award them Tesla stock worth nearly $6 billion as of Friday as they successfully argued Chief Executive Elon Musk’s 2018 The compensation package is illegal.

If approved by a judge, the fee would dwarf the attorney’s payday record.Lawyer involved in Enron-related class action wins award $688 million in fees in 2008.

Lawyers had earlier persuaded the Delaware Superior Court Undo Musk’s $56 billion Judge ruled Tesla’s board failed to demonstrate fairness to shareholders.

In a fee and expense reimbursement petition filed with the court on Friday, attorneys argued the fees are reasonable given how much value they deliver to Tesla shareholders. The attorneys represent former heavy metal drummer Richard Tornetta, who filed the lawsuit on behalf of other Tesla investors.

Lawyers are asking Musk to take just over 11% of Tesla stock, or just over 29.4 million shares. Tesla shares closed at $202.64 per share on Friday, which means the fee is worth approximately $5.96 billion.

Paying wages in Tesla stock shows they are prepared to “eat our food,” the lawyers wrote.

They added: “The benefit of this structure is to directly tie the reward to the benefits created and avoid taking a penny from Tesla’s balance sheet to pay for the expenses. Tesla will also be tax-free.”

They noted that the shares they requested were freely tradable and that Musk’s stock options included a five-year holding period from the date he exercised his stock options.

Lawyers, however, called the nearly $6 billion stake “conservative” under Delaware law, under which they said they were entitled to 33% of the “quantifiable vested interest.”

“Nonetheless, to be conservative, plaintiffs’ attorneys did not seek the 33 percent guaranteed in the prior case,” they wrote.

They point out that they took on the case by chance and will get nothing if they lose.

“Plaintiffs’ attorneys were not compensated for their work and have not been reimbursed for any fees or expenses, and litigating this action will require plaintiffs’ attorneys to allocate significant time and resources over six years, including substantial out-of-pocket expenses,” they wrote.

Greg Varallo, the lead attorney for the plaintiffs and the attorney who signed the brief, did not immediately respond to a request for further comment. He is head of the Delaware practice of the law firm Bernstein Litowitz Berger & Grossmann.

Representatives for Musk and Tesla did not immediately respond to requests for comment.

The attorneys wrote that over the course of the case’s history, they logged a total of 19,499.95 hours — meaning the nearly $6 billion award equates to $305,550 per hour. However, they believe that working hours are secondary if they are worth considering.

“Delaware seeks to incentivize, not punish, effective litigation,” they wrote.

Attorneys for Delaware and New York are also seeking reimbursement of $1.1 million in fees.

Delaware Chancery Court Judge Kathaleen McCormick said Musk’s compensation package was the highest ever disclosed in corporate America. 200-page ruling. She said the process by which the plan was developed was “seriously flawed,” in part because Musk drove the process of finalizing the plan and got the go-ahead from Tesla board members who were “indebted to Musk.”

Musk is expected to appeal the ruling. The CEO and billionaire also said he would seek to move Tesla’s registration to Texas.