April 21, 2024

MediaBizNet

Complete Australian News World

Lawyers who won Elon Musk's compensation case want $5 billion in Tesla shares

Lawyers who won Elon Musk's compensation case want $5 billion in Tesla shares

The lawyers who won the case against Elon Musk and Tesla over the CEO compensation plan want to receive more than $5 billion in Tesla stock for their own compensation.

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

It's a complex issue, but in short, the judge found that Tesla's board and Musk did not act in accordance with public company rules when they presented the plan to shareholders.

The judge found that Tesla had governance issues when rolling out the compensation plan and those issues were not communicated to shareholders before voting on the plan.

The Delaware court found that this invalidates the vote, so Tesla must cancel Musk's compensation plan worth nearly $55 billion in stock options. The automaker and Musk have indicated they will appeal the ruling, but in the meantime, lawyers have filed for compensation.

They are demanding approximately $5.6 billion worth of Tesla stock as payment. In the filing, the three firms representing Tesla shareholders acknowledge that “the requested fees are unprecedented in absolute size,” but claim they will have no impact on Tesla’s balance sheet:

“This structure has the advantage of tying the prize directly to the interest generated and avoids taking a dime off Tesla’s balance sheet to pay the fee.”

For shareholders, they argue it's still a positive that Musk has to give up $55 billion worth of Tesla shares.

Musk has already commented on the situation regarding

READ  Elon Musk says Twitter to change logo, 'goodbye to all birds'

Take Electric

Now, this is ridiculous. Over $5 billion to suggest that Tesla's board of directors bungled Elon's compensation plan makes no sense.

They deserve compensation, but this is more excessive than Elon's CEO compensation plan.

However, Elon and the board are also to blame. If they had not had these clear governance issues, these lawyers would have walked away empty-handed. They would have lost money in this case.

Let's not be blind to this situation. These lawyers are opportunists. They don't do it to do things right by shareholders. They're doing it to get the money, and it couldn't be more clear than with this ridiculous request.

Tesla, on the other hand, gave them that opportunity on their governance issues, and the judge followed the law and sided with the lawyers.

As I wrote in an article about the judge's decision, you can believe that Elon deserves his compensation plan and still agree with the judge's decision that Tesla has governance issues.

Hopefully something good will still come out of this. The court can reduce the attorney's compensation to something more reasonable. This could force Tesla to address its governance issues, and shareholders could vote again on the compensation plan — resulting in Elon getting his money.

FTC: We use automatic affiliate links to earn income. more.