Delaware Judge to Consider $6 Billion in Legal Fees for Elon Musk’s Pay Package
A Delaware judge is set to decide whether or not lawyers who argued against Elon Musk’s multibillion-dollar pay package at Tesla deserve $6 billion in legal fees, regardless of the recent shareholder vote. In January, Chancellor Kathleen McCormick ruled against Musk’s compensation plan, citing a conflict of interest at Tesla’s board. The board, which includes Musk’s brother, decides the pay plan. Lawyers representing Richard Tornetta, a Tesla shareholder who objected to the plan, argued that their efforts in getting Musk’s package rescinded were valuable and amounted to $6 billion worth of Tesla shares.
However, Musk received some positive news in June when Tesla shareholders voted to re-approve his pay package and maintain the current board structure. While this vote doesn’t immediately reinstate the pay plan, it strengthens Tesla’s defense team’s arguments. They filed a motion stating that the shareholder vote vindicates Musk’s stock options award and alters the course of the litigation.
Chancellor McCormick has stated that she wants to hold a hearing on the legal fees separately from the meeting to consider the impact of the shareholder vote. This indicates that she is “preserving her options,” according to James Park, a securities regulation expert at the University of California, Los Angeles. McCormick’s response acknowledges that the impact of the shareholder vote is vital in evaluating the overall value of the litigation that initially struck down Musk’s pay package.
The fate of Musk’s award and whether or not the plaintiff’s attorneys receive $6 billion in legal fees will ultimately be decided by Chancellor McCormick. As of now, attorneys for Tesla and Tornetta have not commented on the matter.
