Tesla investors to urge judge to reject record $7 bln legal fee in Musk pay case

Tesla shareholders challenge $7 billion legal fee request in court over Musk's pay package, sparking legal showdown.

Tesla shareholders will appear in court on Monday to argue that an unprecedented request for more than $7 billion in attorneys' fees to be paid by the company is "outlandish," the latest twist in a legal showdown over Musk's $56 billion pay package.

The record fee request was made by investor Richard Tornetta on behalf of three law firms that represented him, including Bernstein Litowitz Berger & Grossmann. Tornetta owned nine shares of Tesla when he sued over Musk's pay package of stock options in 2018, a legal battle he ultimately won in January when the package was voided.

The fee equals around $7.2 billion at Tesla's Friday's stock price and amounts to a rate of roughly $370,000 for every hour worked by the 37 lawyers, associates and paralegals, some of whom normally bill as little as $275 an hour, according to court documents submitted Tornetta's lawyers.

"The legal fees appear exceedingly disproportionate and outlandish," Nathan Chiu, a Tesla shareholder from New Jersey, wrote to Chancellor Kathaleen McCormick in March, according to a court filing.

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Chiu, the California Public Employees' Retirement System and more than 8,000 Tesla stockholders have flooded the Delaware Chancery Court with some 1,500 letters and objections over the fee, according to court documents.

A hearing scheduled for Monday was moved from McCormick's usual courtroom to the largest in the building to accommodate the 47 attorneys from 19 law firms appearing in the case, as well potential stockholders.