Tesla Challenges $5.6 Billion Award to Attorneys Who Nullified Musk’s Compensation Package

**Tesla Challenges $5.6 Billion Legal Fee Request in Court**

WILMINGTON, Delaware – In a recent court filing, Tesla Inc. has contested the staggering $5.6 billion legal fee requested by the attorneys who successfully challenged CEO Elon Musk’s unprecedented $56 billion compensation package. The electric vehicle giant argued that the legal team, which initiated the lawsuit on behalf of shareholder Richard Tornetta in 2018, should receive a mere fraction of their demand, suggesting a sum as low as $13.6 million for their efforts.

The lawsuit, which culminated in a January ruling that nullified Musk’s record-setting pay deal, was deemed by Tesla to have delivered negligible benefits to the company or its shareholders. According to Tesla, the primary outcome of the legal challenge was to highlight flaws in the negotiation process of Musk’s compensation, thereby offering shareholders the opportunity to address these issues through a new vote at the upcoming annual meeting.

Tesla’s filing with the Delaware Court of Chancery underscored the company’s stance, stating, “Importantly, undisputed market evidence confirms (the) plaintiff achieved little to no discernible value for Tesla or its stockholders.” The legal battle has drawn significant attention, not only for its implications on corporate governance and executive compensation but also for the astronomical legal fees being contested.

The shareholder’s legal team, comprising Bernstein Litowitz Berger & Grossmann, Friedman Oster & Tejtel, and Andrews & Springer, has faced criticism from Tesla and its shareholders alike. The controversy has sparked a broader debate on the accountability and compensation of legal practitioners in high-stakes corporate litigation.

In addition to challenging the legal fee, Tesla is also seeking shareholder support to reinstate Musk’s voided compensation package and to relocate the company’s legal domicile from Delaware to Texas. The move comes after Chancellor Kathaleen McCormick’s ruling, which found Musk to have unduly influenced the board’s decision-making process, a verdict that has since been met with Musk’s criticism.

As Tesla prepares for its annual meeting, the dispute over the legal fees and the future of Musk’s compensation remains a focal point for shareholders and corporate governance observers. The outcome could set a precedent for how legal fees are awarded in shareholder lawsuits and the extent to which such litigation can influence corporate practices and executive pay.

Hundreds of Tesla shareholders have voiced their opposition to the legal fee request, with one, Amy Steffens, holding 19,000 shares, formally objecting through representation by the Munger Tolles & Olson law firm. The controversy underscores the ongoing tension between corporate leadership, shareholders, and the legal system in navigating the complexities of executive compensation and corporate governance.

(Reporting by Tom Hals in Wilmington, Delaware; editing by Peter Henderson and Rod Nickel)