Big upside for Lawyers in the Musk Pay award Court Ruling

I wanted to alert you to a few interesting developments with Tesla. 

You are likely to have seen that Elon Musk’s pay has been voted down by the courts in Delaware and this has obviously made waves. On Tuesday, courts ruled his potential 56bn pay award was excessive and voided it. This has also resulted in Musk now asking shareholders to vote on Tesla incorporating in Texas!

However, if you delve below the headlines that are focused on Musk, there is actually quite an interesting sub story that sheds light on an interesting practice in the legal sector. 

In certain cases, the legal team representing shareholders are able to make a case to the courts to take a proportion of the settlement that shareholders have received. The proportion can be as much as one third of the benefited conferred. 

There are multiple cases against Tesla for other issues so watch this space including a $900m shareholder settlement for a similar issues on board remuneration!  

In the case of the pay award for Musk (potentially a miserly 56bn!) - as this was to be paid in stock based on performance and legal share of such an amount may well be difficult to prove!  However, lawyers (Bernstein Litowitz) will be putting in their claim shortly .

Another example is last year where the lawyers representing shareholders of Dell received over $250m. Whilst that fee is in the process of appeal, it does highlight the potential upside for legal firms in such high profile corporate cases. 

Tracking these corporate legal issues and identifying the legal firms that represent shareholders and other organisations might also highlight potential windfalls! 

I will cover this idea in more detail in a future user group - likely to be in the second half of the year.