The lawyers who won a lawsuit challenging the $56 billion in compensation paid by the board of directors of electric car company Tesla to CEO Elon Musk are demanding trillions of won worth of Tesla stock.
According to Reuters and Bloomberg News on the 3rd, lawyers from three law firms representing the plaintiff in the lawsuit filed by Tesla shareholder Richard Tornetta against Tesla’s board of directors and Musk stated in a document submitted to the Delaware State Court on the 1st that the law of this lawsuit was filed. He requested that he receive 29 million shares of Tesla stock as a fee.
If calculated based on the current Tesla stock price of $202.64, the amount is approximately $5.9 billion (KRW 7.8824 trillion). They explained that they calculated the hourly fee to be $288,888 (about 386 million won). “We recognize that the amount requested is unprecedented in terms of absolute scale,” they said, “but we are prepared to ‘eat our cooking.’” They argued that since the company benefited from receiving back the 267 million shares that Tesla’s board of directors paid to Musk according to the court ruling, it should pay the corresponding legal fees.
“This structure has the advantage of tying compensation directly to the profits generated (by the lawsuit), without having to take even a cent out of Tesla’s balance sheet to pay the fees,” he said, citing the reason for requiring stock rather than cash.
Musk linked an article reporting this news on the social media Previously, Tonetta, a minority shareholder of Tesla, filed a lawsuit in October 2022, saying, “Musk’s compensation package approved by the board of directors in 2018 is invalid,” and the Delaware State Court ruled in favor of Toneta at the end of January this year.
The judge who heard the lawsuit ruled that “the process by which the board approved his compensation was highly flawed” and that “the contract to provide the defendant (Musk) with a record amount of money should be null and void.”
Accordingly, Musk is at risk of spitting out $56 billion worth of stock options he received based on Tesla’s performance after the compensation plan was approved in 2018. Musk reportedly began the process of appealing this ruling last month.