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Lawyers who successfully argued that Elon Musk’s compensation package was illegal are seeking $5.6 billion in Tesla stock.


Dover, Del. –

Lawyers who successfully argued that a massive payout for Tesla CEO Elon Musk was illegal and should be overturned have asked the presiding judge to award them company stock worth $5.6 billion dollars for legal fees.

The lawyers, who represented Tesla shareholders in the case decided in January, made the request to the Delaware judge in court papers filed Friday.

The amount would apparently be by far the largest amount of this type of award, if approved. Lawyers involved in class action lawsuits following the Enron bankruptcy received a record $688 million in legal fees in 2008.

“We are ‘ready to eat our kitchen,'” lawyers for the Tesla plaintiffs wrote in the court filing, arguing that the sum is justified because they worked only on a contingent basis for more than 5 years. If they had lost, they would have gotten nothing. The benefit to Tesla “was enormous,” they said.

The compensation sought represents 11% of the Tesla shares — worth about $55 billion — that Musk sought as part of the compensation, which Judge Kathaleen St. Jude McCormick ruled illegal in January.

Not only does the request take nothing away from the electric car maker’s balance sheet, it is also tax deductible, the lawyers argued. They also claim $1.1 million in expenses.

In her ruling, Judge McCormick accepted the shareholders’ lawyers’ argument that Musk personally dictated the historic 2018 pay plan in sham negotiations with directors who were not independent.

This would have almost doubled Musk’s stake in Tesla. He currently owns 13 percent.


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