Musk compensation decision

The package was voided, so Musk gets nothing.

The shareholder isn't getting anything.

 

Others have suggested the is a negotiation going on. Given the stock price, I suspect in effect it is frozen or were his compensation shares suddenly evaporated?

Bob Wilson

 

The judge sent it to be negotiated between the two parties. The package was rescinded though. Haven't seen details about what Musk was paid to date being held in an 'escrow' or not until the negotiations or not. He couldn't sell those awarded shares for 5 years, so most weren't moving either way.

 

not surprising

 

Sell . . . SELL !

.

 

He doesn't need to. He only needs to represent a few who potentially may have been mislead by a faulty or defective prospectus.

A 'recount' of the old vote remedies nothing. It must be an entirely new vote under a new, proper, conforming prospectus.

 

“Over the past 100 years, Delaware has periodically irritated one or two executives by enforcing the law, and even led some prominent lawyers to call for companies to move elsewhere from time to time,” Coates told Fortune, adding that he was “confident Delaware will not lose significant numbers of incorporations as a result of this one decision, as uninhibited as Musk is.”
Harvard law professor on Elon Musk: ‘Over the past 100 years, Delaware has periodically irritated one or two executives by enforcing the law’

 

Looks like the lawyers are asking the judge for 5.6 Billion dollars.

So let’s see, the case stated Tesla harmed stock holders by allowing a $56 Billion pay package (for which Tesla paid nothing.
Now, the same lawyers that wailed about how stockholders were hurt, are asking to harm stockholders by having Tesla pay their $5.6 Billion dollar fee.

The following is paywalled, but you can read the first paragraph.
https://www.wsj.com/finance/lawyers-who-got-musk-pay-struck-down-seek-5-6-billion-in-tesla-stock-12e85b1b#

 

https://www.msn.com/en-us/money/companies/lawyers-who-got-musk-pay-struck-down-seek-5-6-billion-in-tesla-stock/ar-BB1jbR3e?ocid=INSFICU10

Sounds like they are asking for 10% of the shares being returned to Tesla from Musk. Don't see how that really harms the stockholders beyond there being another share owner.

 

Thanks for the link!
I couldn’t find a non-paywalled article before.
If they are asking for stock that does indeed remove the ‘harm to stockholders’ connection.

I still think it is a pure money grab. I would not be surprised if the lawyers put the drummer up to this.
The best thing for Tesla, IMO, to do would be to clean up the in error prospectus and hold the vote again for the same plan.

 

Not many lawyers would have done it out of the goodness of their heart.
The amount they are asking for is a reflection of the value of the compensation package. Isn't what the lawyers get in other civil cases something like 30% or the reward.

 

Source: Lawyers who had Elon Musk’s pay dismissed as excessive seek $6bn in Tesla shares | Elon Musk | The Guardian

The lawyers who successfully argued that Elon Musk’s $56bn pay package was excessive are seeking a record legal fee worth $6bn, payable in the electric car maker’s stock, according to a court filing.

“We recognise that the requested fee is unprecedented in terms of absolute size,” Friday’s filing by the three law firms with the court of chancery in Delaware said.

The fee works out to an hourly rate of $288,888, according to the filing.

The electric vehicle maker is being asked to pay the fee because it benefited from the return of Musk’s pay package, which the legal team said will result in the return to the carmaker of 266m shares.

“This structure has the benefit of linking the award directly to the benefit created and avoids taking even one cent from the Tesla balance sheet to pay fees,” the shareholder legal team said, noting the fee was also tax-deductible to Tesla.

The fee is being sought by attorneys who represented Richard Tornetta, a Tesla shareholder who sued Musk in 2018 over the pay package, which a Delaware judge nixed in January.

The three law firms are Bernstein Litowitz Berger & Grossmann and Friedman Oster & Tejtel, both based in New York, and Andrews & Springer of Wilmington.

The fee request must be approved by Kathaleen McCormick, the judge overseeing the case. She called Musk’s pay “unfathomable” in her January ruling.

Tesla, Musk’s attorney and Musk did not immediately respond to a request for comment.

The company may object to the fee, as it has a fee request in a similar case over the pay for its directors.

The largest settlements in shareholder cases occur in federal court, where the biggest fee was $688m in 2008 for the legal team that obtained a $7.2bn settlement in a securities fraud case over the failure of Enron Corp.

The Tesla fee request comes as the Delaware supreme court is considering an appeal against a $267m fee in a case that settled for $1bn involving Dell Technologies.

Delaware judges have said that pursuing cases deep into litigation, through depositions and toward trial, should get a higher percentage of the recovery to reflect the risk and effort. The Musk pay case went to a one-week trial.

Opponents of this approach argued that as settlements and judgments grow in size, attorneys should collect a declining percentage to avoid overcompensation.

The legal team said the requested fee worked out to about 11% of the judgment.

Musk’s pay package consisted of stock options that allowed him to purchase Tesla stock at heavily discounted prices and required him to hold the stock for five years. The legal team said they were seeking stock without restrictions on selling it.​

 

as Ella Fitzgerald used to sing,

"nice work if you can get it"

gotta love the excessive fee irony
.

 

I don't believe I suggested they do it for free.
I just think a quarter of a million per hour is a bit excessive.

 

Common legalese words; Remittitur & Additur. Sometimes giant cases bringing about huge amounts that bring forth 100's of hours in legal work beyond the original subject matter - to increase or decrease fees. LOL in essence, a sorta extra trial - all about mo money.
.

 

Don’t forget, the judges are all lawyers.
This wasn’t about musk’s compensation, but a message from the fossil fuel industry, “don’t mess with us”

 

Between three law firms for case filed in 2018.
The amount is in line with the couple of examples in the Guardian article.
I think there is merit in lower percentages for fees as the amount at stake increases, but I also don't know how the entire process goes. How likely are they to get what they first ask for?

Still less shares out than if Musk still had it.

 

For one thing by example - hours billed (or hours necessary for contingency work) is a far far cry from being represented by the 6yrs from now back to 2018. Not saying how much the payroll was/gets padded necessarily, but heck, someone's got to pay for all the computers, clerks, office lease, forensic experts of all types - Westlaw or LexisNexis research software or senior partner luncheons, & on & on & on. Most of the ½ dozen + years from now back to prior to filing are just scheduling. Most hours are done by the grunts.
Historically the court system does not provide a windfall in such circumstances. However now that the courts have become so seriously politicized/ weaponized, who knows how it will go.
.

 

Put in escrow the cash while the appeal proceeds. Don't give those 'Tesla Killers" one share of stock. If they choose to buy TSLA with the cash, GOOD! It will drive up the price of TSLA stock to astronomical regions.

If they choose to live the life of Russian Oligarch, good too. Unearned cash has an amazing ability to evaporate. Like chum, that cash will attract other 'land sharks.'

Bob Wilson