Written by Tom Hales
WILMINGTON, Delaware (Reuters) – The Wilmington electric car maker (NASDAQ:) said the legal team that invalidated Tesla Inc's (NASDAQ:) record pay package is entitled to a small portion of the $5.6 billion legal fees they sought because their lawsuit It provided almost no benefit to the company. Court papers are due Friday.
Tesla said the legal team of Richard Tornetta, the shareholder whose lawsuit led to a ruling in January nullifying Musk's $56 billion pay package, should receive as little as $13.6 million for their work, which began with a 2018 complaint.
Musk's pay is the highest ever given to a CEO, in the United States at least.
Tesla also said that if shareholders vote to ratify the invalid pay package at the company's annual meeting next week, the main benefit of the lawsuit is to inform investors of the flawed negotiating process for the pay awards so they can then correct it with a new vote.
“Most importantly, the undisputed market evidence establishes that Plaintiff has created little or no value to Tesla or its shareholders,” Tesla said in its filing with the Delaware Chancery Court.
The shareholder legal team consists of three law firms, Bernstein Litowitz Berger & Grossman and Friedman Oster & Tegtel, both based in New York, and Andrews & Springer in Wilmington, Delaware.
The objection to the legal fees comes as the company tries to rally shareholders to support a proposal to restore Musk's pay package.
Tesla is also asking shareholders to approve moving the company's legal headquarters to Texas, where it is headquartered, from Delaware, which Musk criticized after the pay ruling.
Counsel Kathleen McCormick (NYSE:) canceled the 2018 pay deal in January because she found after a trial that Musk improperly controlled Tesla's board negotiations to arrange the $56 billion compensation, which she called “unfathomable.”
The legal team that brought the case asked McCormick to order Tesla to pay them about 29 million shares of Tesla stock as part of the 266 million shares they said Musk would return to Tesla as a result of eliminating his salary.
Tesla claimed that the ruling did not result in any stock being returned to the company because Musk never exercised any of the stock options, the payment method on which his compensation is based.
Hundreds of Tesla shareholders wrote to the company or to the court to object to the legal fees request.
A shareholder with 19,000 shares, Amy Stevens, has filed a formal objection to the fee request and is represented by the law firm Munger Tolles & Olson.