Tesla’s Legal Drama Continues

So Tesla shareholders hired a dream team of lawyers to challenge Elon Musk’s massive compensation package.  And you won’t believe how much that legal bill came up to!

So back in 2018, Elon Musk was trying to get Tesla to pay him US$56 billion in compensation for his work.

The size of the package was unprecedented!  Some argued that it didn’t reflect traditional CEO compensation models. While others said it was necessary to attract and retain a CEO of Elon’s calibre and ambition.

But one Tesla shareholder, Richard Tornetta, sued Elon, saying the deal was unfair to shareholders.  By the way, Tornetta only owned nine Tesla shares at the time.

Tornetta’s legal team of 37 lawyers, associates, and paralegals argued the package was unjustified. The judge thought the same thing and ruled in their favour, deeming the package “unfathomable”. 

The victory led to the return of 266 million Tesla shares to the company, which would have otherwise been part of Elon’s payment. 

That ruling was handed down in January of this year.  But fast forward a few months later and it’s time to pay the 37 lawyers and team.

Guess how much they want? A hundred million? Five hundred million? Try a record-breaking US$7.3 billion!  And they want to be paid in valuable Tesla stock, which closed at US$239 on July 19. 

Now US$7 billion works out to US$280,000 an hour!  If granted, it would be the largest settlement in the history of shareholder cases in federal court!

You can bet the shareholders are going to challenge the lawyers’ fees. They didn’t block that huge payout to Musk just to turn around and give a big chunk to lawyers.  Man, imagine hiring lawyers to sue your lawyers. 

Anyways, over 8 thousand Tesla shareholders have already filed over 15,000 letters and objections to the court, challenging the fee.

The judge presiding over the case will ultimately determine the validity of the lawyers’ fees. The outcome will also be closely watched by investors and the legal community, as it could set a precedent for how lawyers are compensated in similar situations. 

And that’s the bottom line.