Lawyers who won Elon Musk’s compensation case want $5 billion in Tesla stocks

The legal professionals who received the case in opposition to Elon Musk and Tesla over his CEO compensation plan need over $5 billion in Tesla shares for their very own compensation.

In January, a judge sided with lawyers representing a Tesla shareholder alleging that Tesla’s board misrepresented Elon Musk’s CEO compensation bundle value $55 billion when presenting to shareholders.

It’s an advanced situation, however in brief, the choose discovered that Tesla’s board and Musk didn’t play by the principles of a public firm when it introduced the plan to shareholders.

The choose discovered that Tesla had governance points when developing with compensation plan and people points weren’t communicated to shareholders earlier than voting on the plan.

The Delaware courtroom discovered that this invalidates the vote and subsequently, Tesla has to rescind the compensation plan value roughly $55 billion in inventory choices to Musk. The automaker and Musk have signaled that they’ll enchantment, however within the meantime, the legal professionals have filed for compensation.

They’re asking roughly $5.6 billion in Tesla shares as fee. Within the submitting, the three companies who represented the Tesla shareholder admit that “the requested payment is unprecedented when it comes to absolute measurement”, however they declare it received’t have an effect on Tesla’s stability sheet:

“This construction has the good thing about linking the award on to the profit created and avoids taking even one cent from the Tesla stability sheet to pay charges.”

And for shareholders, they argue that it’s nonetheless a web constructive since Musk has to surrender $55 billion value of Tesla shares.

Musk has already commented on the scenario on X – saying that “the legal professionals who did nothing however harm Tesla need $6 billion, legal”.

Electrek’s Take

Now, that’s ridiculous. Over $5 billion for declaring that Tesla’s board mispresented Elon’s compensation plan is not sensible.

They do deserve compensation, however that’s extra extreme than Elon’s personal CEO compensation plan.

Nevertheless, Elon and the board are additionally guilty. In the event that they didn’t have these clear governance points, these legal professionals would have come out empty-handed. They might have misplaced cash on this case.

Let’s not be blind to this example. These legal professionals are opportunistic. They don’t seem to be doing this to do issues proper by shareholders. They do it to receives a commission, and it might’t be clearer than with this ridiculous request.

Alternatively, Tesla gave them that chance with their governance points, and the choose adopted the legislation and sided with the legal professionals.

As I wrote in a piece about the judge’s decision, you’ll be able to imagine that Elon deserves his compensation plan and nonetheless agree with the choose’s determination that Tesla has governance points.

Hopefully, there’s nonetheless good that can come out of this. The courtroom might scale back the lawyer’s compensation to one thing extra affordable. It might power Tesla to handle its governance points, and shareholders might vote once more on the compensation plan – leading to Elon getting his cash.