back to article Legal eagles demand $6B in Tesla stock after overturning Musk's mega pay package

Lawyers representing shareholders who quashed Elon Musk's $56 billion Tesla compensation package have submitted a request for nearly $6 billion in the electric car maker's stock as their fee. The request, seen by The Register, filed with the Delaware Court of Chancery, seeks an award in Tesla stock, which the attorneys argue …

  1. Kevin Johnston

    Reasonable reward

    Surely it is more reasonable for them to get the same reward as all the other shareholders...

    Shafted

  2. ComputerSays_noAbsolutelyNo Silver badge
    Joke

    Troll and let troll

    ... on the other hand, it could also be mere greed on the part of the lawyers.

  3. Natalie Gritpants Jr

    Watch out when you buy a house

    The lawyers will want the garden.

    1. Paul Herber Silver badge

      Re: Watch out when you buy a house

      There are no grounds for that.

      1. aerogems Silver badge
        Coat

        Re: Watch out when you buy a house

        You'll soil yourself when you see the bill.

        1. jospanner

          Re: Watch out when you buy a house

          I see this is fertile ground?

  4. I ain't Spartacus Gold badge
    Flame

    Prediction

    I predict that there's going to be a terrible accident soon. An item of space debris, of "unkown origin" is soon going to fall on this law firms' offices.

    I don't know what gives me this idea. It's just a feeling...

    1. Anonymous Coward
      Anonymous Coward

      Re: Prediction

      Well, Musk DID put a Tesla in orbit already.

      That said, it's hard to decide who to root for here :)

      1. John Brown (no body) Silver badge

        Re: Prediction

        Yes, it's not often I feel almost in agreement with Musk!

        Musk said: "The lawyers who did nothing but damage Tesla want $6 billion. Criminal."

      2. aerogems Silver badge

        Re: Prediction

        The lawyers. As I've pointed out, the author left out that the lawyers were working on a contingency basis. They fronted all the costs associated with the case and risked getting nothing if they lost. You might think it's still an excessive amount, but it's not nearly as bad as it sounds without that particular detail.

        I'm kind of disappointed in El Reg on this one. Usually their journalistic standards are a lot higher and this sort of thing wouldn't happen. One can hope it was just a case of the editor not having their morning coffee yet and they will update the article to correct this oversight soon.

        1. LybsterRoy Silver badge

          Re: Prediction

          OK I'll bite - what were their actual costs - excluding fees?

      3. Someone Else Silver badge

        Re: Prediction

        That said, it's hard to decide who to root for here

        Well, not really. El Muskrat has been rightly and mightily smacked down, so rooting for that is wasted effort (the world already won). So it becomes a matter, IMHO, of rooting for or against the unbridled greed of a handful of scheisster lawyers. Doesn't seem like too difficult of a choice to me. (YMMV, of course, especially if you are a scheisster lawyer with unbridled greed....)

        BTW, rooting against the scheissters is not the same a rooting for El Muskrat.

    2. STOP_FORTH Silver badge
      Mushroom

      Just the one?

      Aren't they planning to deorbit about a hundred of the things because of an unfixable fault?

      I imagine that would do the trick nicely.

  5. Jonathan Richards 1
    Joke

    Signature move

    When did E.M. start signing his Xcretions "Criminal"?

    1. Zippy´s Sausage Factory
      Joke

      Re: Signature move

      After releasing an EDM track a few years ago, maybe he's taking up gansta rap?

  6. Missing Semicolon Silver badge

    Why do the lawyers want money from Tesla

    .. when they were engaged by the shareholders? Surely they should foot the bill?

    Whilst they might have won, I don't think that lets you set any arbitrary fee you like.

    1. amanfromMars 1 Silver badge

      Re: Why do the lawyers want money from Tesla

      I’m happy to wallow in the thought, Missing Semicolon, .... Great minds think alike ..... and almost exactly at the same time too, which is a neat trick too. :-)

    2. Tom 38

      Re: Why do the lawyers want money from Tesla

      The shareholders are Tesla.

      1. lglethal Silver badge

        Re: Why do the lawyers want money from Tesla

        Oh no they are not! Tesla are the workers who build the products, and the engineers who design the products that they sell to make the firm it's profits. I'll even go so far as to include the Janitorial staff who keep the place clean, the HR and finance staff that keep the people paid and the middle management that keep the people moving in (more or less) one direction.

        The Sshareholders and the C-Suite are the vultures who skim the cream off the top, without adding an iota of value to the firm.

        On the topic of this specific article - The shareholders who brought this case should absolutely be the ones paying their lawyer's fee. They have stopped an additional (and hugely excessive) number of shares from going to El Musky, and so by virtue of a smaller share pool, the value of their stock has increased. They gain, so they should pay their own bloody lawyers...

        These ambulance chasers have set such a high figure, probably to try for shock value, and so will "settle" for only 10% of that (which is still a ridiculously high value). I hope the judge comes down on them like a ton of bricks. Isnt there something like bringing the profession into disrepute with which to smack these idiots with? Threaten their licence to practice law unless they come back with a clearly reasonable value quick smart...

      2. wub

        Re: Why do the lawyers want money from Tesla

        If the shareholders >are< Tesla, who brought the lawsuit?

        Tesla is a "non-human person" in US law I believe, although IANAL.

    3. Charlie Clark Silver badge

      Re: Why do the lawyers want money from Tesla

      This kind of arrangement is quite common in "no fee" class action suits and is, arguably (though I wouldn't argue this myself), a good deal for shareholders. Certainly a lot less than the $ 57 million they were on the hook for.

      But US tort law really is fucked (and many law firms would agree with this): companies often prefer bankruptcy to damages. But I can't see the even more dysfunctional than usual Congress passing the necessary reforms.

      1. Falmari Silver badge

        Re: Why do the lawyers want money from Tesla

        @Charlie Clark "This kind of arrangement is quite common in "no fee" class action suits"

        But this case was not a class action suit, it was a shareholder derivative suit*, brought by a single shareholder Richard Tornetta, who held nine shares. It was not Tesla being sued, it was Elon Musk and others that were the defendants**. If this was a class action the plaintiff's lawyers would claiming their fees be paid by the defendants.

        The lawyers want money from Tesla because, they were engaged to work on Tesla's behalf, just not engage by Tesla, from which Tesla benefited by $57 million. So while Tesla were not directly involved in the lawsuit they were neither plaintiffs or defendants, lawyers they did not engage have asked to be paid not for billable hours, but a cut of $57 million that's returned to Tesla.

        I can understand being paid for the work being done, but not setting billable hours charge after the work is done. This looks like lawyers setting the rates after the case is finished.

        *"A shareholder (stockholder) derivative suit is a lawsuit brought by a shareholder or group of shareholders on behalf of the corporation against the corporation’s directors, officers, or other third parties who breach their duties." https://www.law.cornell.edu/wex/shareholder_derivative_suit

        ** ELON MUSK, ROBYN M. DENHOLM, ANTONIO J. GRACIAS, JAMES MURDOCH, LINDA JOHNSON RICE, BRAD W. BUSS, and IRA EHRENPREIS

  7. amanfromMars 1 Silver badge

    Just asking for a dear friend .....

    Lawyers representing shareholders who quashed Elon Musk's $56 billion Tesla compensation package have submitted a request for nearly $6 billion in the electric car maker's stock as their fee.

    ????? Hmmm? Is that shareholders lawyers representation not tantamount to the lawyers being employed by said shareholders and thus it is actually they, the disgruntled and covetous shareholders, who be jointly and severally liable to pay such a ludicrous extortionate bill if it is not deemed justifiably criminal to ridiculous excess?

    1. John Brown (no body) Silver badge

      Re: Just asking for a dear friend .....

      If the lawyers get their $6B in shares and the right to sell immediately, isn't that going to cause a dip in the share price and thus "deprive" their clients? And after "discovery" etc, during the case, could these lawyers be wanting that "sell now" caveat because they know something about Tesla and there might well be insider trading?

    2. Helcat

      Re: Just asking for a dear friend .....

      As the Lawyers represented some, but not all, of the shareholders (I believe Musk is a shareholder, after all, and I doubt he agreed to this action), and they did not represent Tesla, then it does make sense that those the Lawyers represented should be the ones to pay up. Especially as having Tesla pay would financially harm the shareholders who didn't agree to this action (you can exclude Musk here if you like - I'm thinking of the others who weren't asked if they wanted this).

      Also: Shouldn't the costs for representation be detailed in the contract (between shareholders represented and the law firm)?

      Unless: Did the Judge assign the legal costs to Tesla? If so, wasn't the costs limited by the court?

      Although, I think it would be fair if the shareholders who engaged the lawyers had to provide the shares the lawyers are demanding, and if they can't... the lawyers should sue the shareholders they were representing.

      Sometimes I think the American legal system is a real mess. Then again, the UK system isn't that much better.

  8. Pascal Monett Silver badge

    US lawyers

    They are a species that is in dire need of becoming endangered.

    So you spent a few hundred hours preparing and presenting a case ? That does not justify $300K/hour in any way, shape or form. You did your fucking job, and for that you should be paid no more than your already exorbitant $1000/hour fee.

    This is ambulance chasing at its finest. I certainly do not support His Muskiness in any way, but these scum need to be put down. Period.

    1. Sam not the Viking Silver badge

      Re: US lawyers

      Perish the thought that lawyer's fees should be based upon their costs.

      You forget that lawyers are the people who get what you thought was coming to you.

    2. Steve Davies 3 Silver badge
      Black Helicopters

      Re: US lawyers endangered?

      ROFL.

      The law schools are producing more scumbags to fleece you of your hard earned cash (unless you are named Trump who had a habit of stiffing anyone who he owes money too) than the market can bear.

      That's why you end up with Judges who don't have a clue (Cannon) and 'I can fake being smart' Habba.

    3. aerogems Silver badge
      Boffin

      Re: US lawyers

      TFA leaves out the detail that these lawyers were working on a contingency basis, so not only did the lawyers front all the money for filings and not taking on other paying clients to devote time to this case, but if they would have lost they would have gotten nothing. It's a common arrangement in these situations for the lawyers to get something like 60% of the award for their client. So, in this particular case, it's not quite as bad as it seems at first blush.

      1. tip pc Silver badge

        Re: US lawyers

        Allegedly, their client was 1 shareholder who had 9 shares.

      2. LybsterRoy Silver badge

        Re: US lawyers

        "it's not quite as bad as it seems at first blush" WRONG

  9. KayJ

    "The first thing we do..."

    1. Steve Davies 3 Silver badge

      re: The first thing we do

      If find a nice big wall, a supply of blindfolds and a big sign saying 'Lawyers Wanted'.

      1. Lon24

        Re: re: The first thing we do

        Why waste the bullets? I'm sure Elon has a spare SpaceX rocket or three. We just need to pitch in and buy him the Douglas Adams books to inspire him. But please spare the telephone sanitisers.

      2. Bebu Silver badge
        Big Brother

        Re: re: The first thing we do

        《a supply of blindfolds》

        What for?

        I know Jeremy Clarkson had an aversion to shooting things in the face but firing squads usually aim lower. :)

        A legal system where a claim for USD 6 billion in costs is entertained and isn't an automatic admission to Bedlam is pretty Bodmin itself but we already knew that. :)

  10. Sam not the Viking Silver badge

    Lawyers......

    Some time ago, after our start-up was taken over by a large TLA conglomerate, their board decided to reclaim their spending on us for 'due diligence' reasons. Although they had done their due diligence, they claimed we had not included all possible liabilities and so employed <<big name>> London lawyers, in an attempt to intimidate with big words.

    In response, we hired an (at the time) eye-wateringly expensive brief to make our defence. He duly wiped the floor with them and the claim was rescinded; except that they had made an announcement to the Stock Exchange and couldn't now correct it without losing face. In the end, we each agreed to pay a small amount in order for them to maintain their aura of competence.

    Having just bought out a successful, forward-looking company, it was a stupid move and they lost any good-will we brought to the joint venture.

    1. Anonymous Coward
      Anonymous Coward

      Re: Lawyers......

      Don't give a shit. As long as every breathing minute of the day can be charged at $5,000 per hour.

  11. t245t Silver badge
    Big Brother

    Biased Judge Kathaleen McCormick ..

    “The move comes after a court decision last month, where the judge found that a 2018 compensation package, which included substantial stock options, was unfairly approved due to the Tesla board's close ties with Musk.”

    So the judge tossed the pay package because she didn't like Musk rather than any intrinsic value of the package. I see the Judge has got form:

    McCormick oversaw Twitter's July 2022 lawsuit against the entrepreneur when he tried to break his $44 billion contract to buy the social media platform. The judge rejected Musk's foot-dragging tactics and on the eve of an expedited October trial, he agreed to stick to his deal to buy the company that is now known as X.”

    “The judge said she rushed the Twitter case to protect the company and shareholders from damaging uncertainty. By contrast, the Musk ruling took an unusually long time for a court that prides itself on delivering complex rulings in a matter of months. The week-long pay trial for Musk, which was held without a jury, ended in November 2022.”

    1. John Brown (no body) Silver badge

      Re: Biased Judge Kathaleen McCormick ..

      So, is this a judge with a grudge against Musk or is it simply two cases that happened to go against Musk on the balance of probabilities and law?

      1. aerogems Silver badge
        Boffin

        Re: Biased Judge Kathaleen McCormick ..

        Simple fact is, we don't know. There may have been plenty of perfectly good reasons why this ruling was so delayed. Maybe the judge's docket was just stuffed to the rafters with other very important cases and this one could wait. Especially after Xitler threw a bunch of billionaire narcissist tantrums the last time around. There's a big difference between "I'm going to rule against you because I don't like you" and "I'm going to slow walk your case because I don't like you." There are plenty of ways a judge can get petty revenge on people who appear before them that don't involve the way they rule on the case. You'd need to take a real deep dive into the last couple years at that particular court to figure out why this particular case took so long, but of course that doesn't really fit in with the desire for instant gratification of the Internet.

    2. imanidiot Silver badge

      Re: Biased Judge Kathaleen McCormick ..

      Judges by and large have a dislike for people that make their job needlessly complex and take needlessly long. And yes, once you've shown you don't respect them or their profession it's likely judges will take a very dim view of any further such attempts in any subsequent cases. Judges have a lot of leeway in how they apply the law with regards to requirements for filings and allowing changes, amendments, etc and not needlessly pissing off the judge by taking the piss with their initial leniency like Musk did in the first case is always smart. Especially the first case was basically down to Musk and his team of lawyers using every single thing they could think of to "yes, but, actually, no" on every little thing they could think off and at some point the judge just had enough and laid down the smackdown according to the law.

      In the second case (the one about the compensation package) it's also well motivated on law and precedent on why the very close ties between Musk and the Tesla board were reason for not allowing the exorbitant package to go through. Basically it comes down to Musk having unlawful sway on the board to get them to approve a compensation package that wasn't in the best interest of the company and it's shareholders for them to approve. Nothing to do with personal dislike (though I can't rule out McCormick had a smile on her face as the wrote down her verdict)

    3. amanfromMars 1 Silver badge

      Re: Biased Judge Kathaleen McCormick ..

      The USA is not alone in the world in having dodgy judges well past their best and finding it a struggle to remain professionally unbiased in an increasingly complex and maddening world ...... https://www.zerohedge.com/political/british-man-jailed-2-years-over-stickers-pm-whines-about-democracy

      1. imanidiot Silver badge

        Re: Biased Judge Kathaleen McCormick ..

        You may want to read better sources than Zerohedge... I've been some way into that rabbit hole but at some point I noticed the pure vitriol emanating from sites like that and crawled back out. Ever since then the stupid spouted there (no matter the sometimes correct or factual things found sprinkled in) just hurts.

        1. CrazyOldCatMan Silver badge

          Re: Biased Judge Kathaleen McCormick ..

          You may want to read better sources than Zerohedge...

          Especially as the person involved is clearly a far-right white power racist. I *very* much doubt whether it was the just act of putting up stickers/posters that got him put in pokey.

    4. gnasher729 Silver badge

      Re: Biased Judge Kathaleen McCormick ..

      I think the proposed pay package was about 50 times higher than that of Tim Cook, who has during his career increased the market capps of Apple by about 3 trillion dollars. So I think we can say with rather good conscience that Elon Musk wasn't anywhere near worth the sucggested pay package.

  12. Howard Sway Silver badge

    The lawyers who did nothing but damage Tesla want $6 billion. Criminal

    Wonder what that makes the guy who wanted $56 billion? I mean, the lawyers fee request is ludicrous, but it's only 10% of what he felt entitled to.

    1. Flocke Kroes Silver badge

      Re: The lawyers who did nothing but damage Tesla want $6 billion. Criminal

      The lawyers saved Tesla at least $50B: Job well done.

      Musk lost Tesla $6B by not cancelling his bonus for doing bugger all when the share holders called him on it.

  13. Stuart Castle Silver badge

    This is what has gone wrong with capitalism. While I don't want to defend lawyers, they *are* going for a percentage of the case, which is apparently what they would be normally paid. The problem is that Elon was paid a ridiculously high amount in the first place.

    What did he do that has earned that kind of bonus? Bear in mind that it's likely that Tesla has not made that much in profit since it was created.

    I'm all for bonuses.. I think they do encourage innovation, which can increase profits. If they are sensible. If they are too high, you run the risk of starving the company of much needed finance that can be used to improve the company resources, and hopefully, profit. $55.8 bn is a *lot* of finance..

  14. Electronics'R'Us
    Devil

    Hilarious

    "The lawyers who did nothing but damage Tesla want $6 billion. Criminal."

    Pot, meet kettle.

  15. Manolo
    Joke

    Why don't sharks bite lawyers?

    Professional courtesy.

  16. TheSirFin

    When I call a Plumber

    Seessshhhh ... this all sounds very amateur hour.

    When I call a plumber and ask him what his rate is, and how much it will cost for a job.

    I cannot imagine not asking a Law firm what they are going to charge to take EM to court to do him out of $56B.... ???

  17. Mishak Silver badge

    I guess when this gets to court

    They can "be reasonable" and drop the claim to $600M. LOL

  18. aerogems Silver badge
    FAIL

    Contingency

    The article leaves out the detail that the lawyers were working on this case on a contingency basis. The article really should be edited to include this rather significant detail.

    It means the lawyers were fronting all of the costs and turning down paying clients in order to devote time to this case, and if they had lost, they would have gotten nothing. Which is why it is very common for these kinds of arrangements to involve the lawyers getting more than half of anything awarded to their client. You can argue that such arrangements are still exorbitant, and I might even agree with you, but it's not like these lawyers were getting paid by the person who brought the case [i]and[/i] now also want to be paid by Tesla. They're probably at least a few thousand in the hole after all the work they put in, but ultimately it'll be up to the judge to decide what they get. There was a case recently where the lawyer involved used ChatGPT to attempt to figure out what kind of legal fees would be typical, and the judge was... less than impressed, basically slashing the amount they requested by like two-thirds. We'll see how this one plays out, assuming El Reg, or anyone else, bothers to cover it.

    1. Throatwarbler Mangrove Silver badge
      Thumb Down

      Re: Contingency

      You've posted the same thing repeatedly in this thread. Give it a rest.

      1. aerogems Silver badge
        Stop

        Re: Contingency

        Is someone holding a gun to your head making you read my comments? If so, it'd be wrong of me to suggest they pull the trigger for being a twatwaddle, so I won't. If there's not someone holding a gun to your head forcing you to read my comments, why are you if they offend you so much?

        1. Throatwarbler Mangrove Silver badge
          Holmes

          Re: Contingency

          Because your repetitive twaddle is clogging up the thread. If this were Usenet, you'd be in my killfile already, but, sadly, the killfile is one of the greatest losses we endured when moving to Web forums.

          1. Anonymous Coward
            Anonymous Coward

            Re: Contingency

            "killfile is one of the greatest losses we endured when moving to Web forums."

            OTOH without killfiles the annoyances will at least get downvotes and replies that point out that spamming is stupid. There is then the teeny, tiny, spark of hope that they'll improve. Ok, they have to have at least one iota of self-awareness beforehand, which cuts out some obvious candidates, but if we can save one sinner from themselves...

    2. imanidiot Silver badge

      Re: Contingency

      Sucks for them to take on a case on contingency basis without a very clearly defined contract then. Their contingency could only be based on what their direct client (the person that hired them) actually gained or saved, not what ALL shareholders (even those that didn't hire them and that they had no contact with) gained or saved. Which is likely not a portion of the total gain or savings on share packages but a portion of the change in share price for their client. So they can look forward to a few hundred dollars probably. These lawyers/parasites are acting like they were employed by all shareholders collectively or by Tesla. They were not.

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Other stories you might like