Major Setback for Elon Musk as Judge Rejects $100 Billion Pay Package
In a significant blow to Tesla CEO Elon Musk, a Delaware court judge has denied his bid to reinstate a massive pay package worth a staggering $100 billion. This decision comes after a lengthy legal battle, which also saw the law firms representing the plaintiffs seeking a hefty sum for their services.
Law Firms Seek Massive Payout
The lawyers who successfully argued that Musk’s pay was illegal and should be rescinded had initially requested a whopping $5.6 billion for their efforts. However, the judge was not convinced, citing that the figure was excessive.
Judge Awards Law Firms $345 Million
Instead, Delaware Chancellor Kathaleen McCormick awarded the plaintiffs’ attorneys from three law firms – Bernstein Litowitz Berger & Grossman LLP, Andrews & Springer LLC, and Friedman Oster & Tejtel PLLC – a total of $345 million in cash or Tesla shares. While significantly lower than the initial request, this amount still represents a substantial payout.
A Well-Reasoned Decision
In a statement, Bernstein Litowitz Berger & Grossman expressed their satisfaction with the ruling, hoping that it would bring an end to the matter for Tesla shareholders. However, they also indicated their willingness to defend the court’s decision if an appeal is filed.
Calculating the Fees
In her ruling, McCormick acknowledged that the methodology used by the law firms was sound, but applying a percentage of the value achieved in rescission of the $55.8 billion compensation package resulted in an “eye-popping figure.” She noted that the lawyers’ time and efforts were substantial, logging 19,499.95 hours, conducting an investigation, document discovery, and taking 17 depositions, among other work.
A Reward for Hard Work and Risk
The fee award represents a 25.3 multiplier of the hours the lawyers worked, recognizing their significant efforts and the massive contingency risk they faced. McCormick emphasized that the plaintiff’s counsel’s standing and ability supported the fee, citing their experience as stockholder advocates who have secured some of the largest recoveries in the court’s history.
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