Billionaire electric carmaker, Elon Musk, has been asked to pay a record $6 billion in legal fees, which would be paid in the company’s shares.
The court of chancery in Delaware disclosed this in a statement seen by News.ng.
The unusual request was dubbed as the largest attorney fee request ever heard of by Ann Lipton, a corporate law professor at Tulane University.
Attorneys representing Richard Tornetta, a Tesla shareholder who sued Musk in 2018 over the pay deal that a Delaware judge rejected in January, are requesting the fee.
The three legal practices are Wilmington’s Andrews & Springer, New York’s Friedman Oster & Tejtel, and New York’s Bernstein Litowitz Berger & Grossmann.
“We recognise that the requested fee is unprecedented in terms of absolute size,” Friday’s filing by the three law firms with the court of chancery said.
The highest legal fee was $688 million in 2008 for the legal team that secured a $7.2 billion settlement in a securities fraud lawsuit involving the collapse of Enron Corp.
Reacting to the development, Ann said:
“Now, to be fair, the case involved the largest compensation award ever to an executive.”
“I assume the plaintiffs’ attorneys figured if they sought $6 billion in cash in fees it could cripple Tesla,” she said.
“Since the case involved a stock award to Musk, they thought it would be appropriate to ask for the fee in shares so it wouldn’t be as rough for Tesla shareholders. That makes a lot of sense to me.”
The submission represents the most recent development in the resolution of Delaware Chancery Court Chief Judge Kathaleen St. J. McCormick’s finding that the boards of Tesla approved Musk’s astronomical remuneration plan because they were restrained by conflicts of interest.
The judge also criticised Tesla for disclosing the compensation plan to the public.
A request for comment was not immediately answered by Tesla, Musk’s lawyer, or Musk himself.
The company might object to the fee because it has a fee request in a related issue involving the directors’ compensation.
