Tesla and its shareholders are up in arms over a record-setting lawyer's fee request being heard in Deleware court today.
Delaware law awards lawyers who help shareholders recover lost value in their companies an increasingly large percentage of the "recovery" amount. The lawyers representing Richard Tornetta in his suit over Elon Musk's gargantuan pay package have determined they are due 11% of that amount, which amounted to about $7.2 billion at Friday's stock price. The hearing had to be moved to a bigger room because so many lawyers were piling in.
Tornetta's lawyers argue they deserve the fee as a cut of the benefit they say they conveyed to Tesla when a judge voided Musk's pay package, which returned to Tesla around 266 million shares reserved for the stock options. That stock would be worth about $67 billion at Friday's price of $251.82 per share.
Tornetta's attorneys said it is the largest judgment ever awarded by an American court, excluding punitive damages. They argued they should receive a fee equal to 11% of that judgment, a percentage that is arguably conservative by Delaware legal precedent. They asked to be paid in the form of 29 million Tesla shares.
Investing.com
Naturally, Tesla claims Musk's package has been restored by the shareholders, and the lawyers are due far less. However, the Judge has not reaffirmed that pay package yet, and they may be getting ahead of themselves. Maybe they need to offer a horse.
The company argues that Musk's pay package has been restored and that Tornetta's legal victory has been transformed into a loss. As a result, the case conveyed no benefit to Tesla and the shareholder lawyers should receive as little as $13.6 million, Tesla said.
Some of the shareholders who have opposed the request wrote form letters to the judge, but a few have hired attorneys to file formal objections to the fee, including Amy Steffens, a pilot, and Kurt Panouses, an attorney who specializes in representing lottery winners.
McCormick may take weeks or months to rule. The Delaware Supreme Court is currently considering a $267 million fee request in a shareholder class action involving Dell Technologies (NYSE:DELL) and that decision could provide fee guidance.
Previously:
• Tesla seems scared Musk's bloated pay package won't fly
• Tesla shareholders vote to give Elon Musk pay package worth $56bn
• Judge rejects Elon Musk's full self-dealing pay package
• Elon Musk's continuing struggle to be overpaid
• Lawyers who blocked Elon Musk's $51bn pay package want $6bn fee
