Lawyers representing shareholders who successfully challenged Elon Musk’s $56 billion pay package have reportedly requested a Delaware state court to compensate them with Tesla Inc TSLA shares worth nearly $6 billion.
What Happened: The attorneys, from Bernstein Litowitz Berger & Grossmann, Friedman Oster & Tejtel and Andrews & Springer of Wilmington, submitted their request to the Delaware Court of Chancery on Friday, as reported by the Financial Times.
The lawyers acknowledged that the requested sum was unprecedented but argued that it was in line with previous Delaware awards and accounted for just 11% of shareholder recovery.
The lawyers further requested that they be allowed to sell these shares immediately without a holding period, as per the report.
Why It Matters: The request follows a significant ruling last month, where the judge overseeing the case, Kathaleen McCormick, nullified a 2018 pay package awarded to Musk by the Tesla board. The judge found the board to be insufficiently independent of Musk and the governance process leading to the grant as well as the value of the shares to be “unfair” to other shareholders.
Musk is expected to appeal against the pay nullification decision. He can also challenge the fee request. The lawyers’ request for payment in Tesla shares, which would make them among the 10 largest shareholders of the company, adds another layer of complexity to the ongoing legal saga.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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