Tesla CEO Elon Musk’s attempt to resurrect his contentious $100 billion compensation package was rejected by a Delaware court judge. But Musk’s loss wasn’t the only thing in the news. The lawyers for the plaintiffs, who claimed that Musk’s compensation was unlawful, demanded an astounding $5.6 billion in compensation. In the end, the court granted them $345 million, which was a small portion of what they had initially asked for.
The three law firms that defended Tesla shareholders, Bernstein Litowitz Berger & Grossman LLP, Andrews & Springer LLC, and Friedman Oster & Tejtel PLLC, won the case before Delaware Chancellor Kathaleen McCormick. Tesla shares or cash will be used to cover the $345 million settlement.
McCormick recognized the plaintiffs’ legal team’s significant efforts in her ruling, pointing out that they put in 19,499.95 hours, carried out in-depth investigations, examined a large number of documents, and took 17 depositions. The attorneys took on large financial risks on a contingency basis and confronted fierce opponents.
The judge dismissed the firms’ $5.6 billion demand, calling it a “windfall,” but praised their fee-calculating methods. She said that a “eye-popping figure” was produced by calculating the canceled $55.8 billion pay package using a percentage approach. In contrast, Tesla’s legal team had asked for a far smaller cost of $54.5 million.
McCormick’s ruling cited the attorneys’ skill, reputation, and record of handling complex stockholder cases. The final award represents a 25.3 multiplier of the hours worked by the plaintiffs’ counsel, underscoring the court’s recognition of their impact on the case.
A statement from Bernstein Litowitz Berger & Grossman expressed satisfaction with the ruling, emphasizing the importance of the judgment for Tesla shareholders. While the decision is a landmark victory, any potential appeal by Musk and Tesla could extend the legal battle to the Delaware Supreme Court. This case highlights the complexity of shareholder litigation and the high stakes involved when challenging one of the world’s wealthiest individuals.
