Tesla Slams Laywers Demanding $5.6 Billion Payout for Voiding Elon Musk's Multibillion Dollar Pay Package

By Jace Dela Cruz

Jun 08, 2024 03:57 AM EDT

Tesla is objecting to a $5.6 billion legal fee requested by the legal team that voided Tesla CEO Elon Musk's $56 billion pay package. 

SpaceX, Twitter and electric car maker Tesla CEO Elon Musk attends an event during the Vivatech technology startups and innovation fair at the Porte de Versailles exhibition centre in Paris, on June 16, 2023.
(Photo : JOEL SAGET/AFP via Getty Images)

Tesla Challenges $5.6 Billion Legal Fee 

The electric automaker argued in court papers filed at the Delaware Court of Chancery on Friday that the lawyers deserve a much smaller amount for their work, suggesting as little as $13.6 million.

The lawsuit, initiated by Tesla shareholder Richard Tornetta in 2018, led to a January ruling that voided Elon Musk's pay package. Tesla said the lawsuit provided minimal benefit to the company and its shareholders.

The company further noted that if shareholders ratify the voided pay package at its annual meeting next week, the lawsuit's primary impact would be to inform investors about the flawed negotiation process, allowing them to correct it with a new vote.

READ NEXT: Tesla Defends Musk's $56 Billion Pay Package Following 'Excessive'Remarks from Shareholders 

Tesla Pay Package of Elon Musk

Richard Tornetta's legal team, comprising three law firms, requested the court to order Tesla to pay them with some 29 million shares from the 266 million shares they said Elon Musk would return to Tesla due to his pay package being voided.

However, Tesla argued that the court ruling did not result in the return of any stock because Musk never exercised stock options, the form of payment tied to his compensation.

Tesla is challenging the legal fee request while also seeking shareholders' approval to reinstate Elon Musk's pay package and relocate the company's incorporation from Delaware to Texas. 

Numerous Tesla shareholders have opposed the legal fee request. Among them is Amy Steffens, who owns 19,000 shares. Represented by the Munger Tolles & Olson law firm, she has recently filed a formal objection to the fee request.

READ MORE: Elon Musk's Potential 'Business Transaction' With Tesla Director Raises Concerns on Independence of Board's 'Special Committee' 

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