\n
![](\"https:\/\/fortune.com\/img-assets\/wp-content\/uploads\/2024\/06\/GettyImages-2151277359_132eb0-e1718050029183.jpg?w=2048\")
<\/p>\n [ad_1]
\n<\/p>\n
But there\u2019s another group that stands to land a record windfall: The legal team that successfully argued against Musk\u2019s payout in a Delaware court earlier this year<\/a> is seeking a whopping $5.6 billion in stock-based legal fees\u201417 times larger than the biggest fee in Delaware history<\/a>.<\/p>\n \u201cWe recognize that the requested fee is unprecedented\u2026 The size of the requested award is great because the value of the benefit to Tesla that Plaintiff\u2019s Counsel achieved was massive,\u201d the plaintiff\u2019s legal team wrote in a court filing<\/a>. \u201cWe are prepared to \u2018eat our cooking.\u2019\u201d<\/p>\n Tesla shareholders will give Musk an answer later this week, but the opposing lawyers will have to wait until a hearing scheduled for July 8<\/a> for the Delaware Chancery Court to approve or deny the fees they\u2019re seeking.<\/p>\n Musk himself has voiced strong opposition to the lawyers\u2019 fee proposal. \u201cThe lawyers who did nothing but damage Tesla want $6 billion. Criminal,\u201d Musk previously wrote in a post on his personal X account<\/a>.<\/p>\n The lawyers seeking the $5.6 billion in fees represented plaintiff Richard Tornetta, a Tesla shareholder who filed a suit in 2018 protesting Musk\u2019s compensation package<\/a>, which had earlier received the approval of Tesla\u2019s board and 70% of the company\u2019s shareholders<\/a>. <\/p>\n It was structured so that Musk would unlock certain stock awards if he guided the company to various milestones based on metrics like market capitalization. Under Musk\u2019s leadership, Tesla blew past those milestones faster than anyone expected, hitting $1 trillion in market cap by 2021<\/a>. (It\u2019s since retreated, to just over $551 billion today.) <\/p>\n But Delaware Chancellor Kathleen McCormick sided with Tornetta earlier this year, concluding that Musk\u2019s pay package was an \u201cunfathomable sum\u201d and the process to approve it was \u201cdeeply flawed,\u201d in part because the Tesla board contains many of Musk\u2019s close friends and colleagues.<\/p>\n Tesla shareholders will decide whether to reverse the Delaware court decision this Thursday. But regardless of the outcome, the plaintiff\u2019s lawyers won the case, and they\u2019re demanding their pound of flesh. While extremely high in dollar terms, the fee the lawyers are requesting is well below what other litigators have been awarded in percentage terms\u2014just 10% of the $56 billion they saved Tesla shareholders by voiding Musk\u2019s payout.<\/p>\n Last year, the Delaware Chancery Court awarded lawyers 27% of the $1 billion settlement<\/a> from an M&A case involving Dell, and in 2011 lawyers netted 15% of the $2 billion in damages<\/a> stemming from a case involving mining company Southern Peru Copper Corp.<\/p>\n Delaware courts reward lawyers who pursue complex cases into the late stages of litigation and get \u201creal results,\u201d Delaware Vice Chancellor J. Travis Laster said in approving the Dell litigators\u2019 fee application.<\/p>\n But even though the percentage might be relatively modest, the monumental scale of the ruling makes the lawyers\u2019 fee application extraordinary.<\/p>\n \u201cThe dollar amount requested in the fee petition is unusual,\u201d McCormick conceded in a court filing<\/a>.<\/p>\n Even if Tesla shareholders vote to reinstate Musk\u2019s pay package, there\u2019s no guarantee he would actually get the money<\/a>. Corporate law isn\u2019t clear on if a shareholder vote is sufficient to overturn a legal ruling, and Musk could be required to go back to court to get final approval for the money. If shareholders don\u2019t vote in his favor, analysts have speculated Musk could stop paying as much attention to Tesla and spend more of his time focusing on his other companies.<\/a><\/p>\n \u201cElon is not a typical executive, and Tesla is not a typical company,\u201d Tesla board chair Robyn Denholm said<\/a>. \u201cSo the typical way in which companies compensate key executives is not going to drive results for Tesla. Motivating someone like Elon requires something different.\u201d<\/p>\n<\/div>\nSubscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. Sign up<\/a> for free.<\/div>\n