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Tesla and Musk antagonists face off over multibillion-dollar lawyer fee

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Tesla and Musk antagonists face off over multibillion-dollar lawyer fee

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Tesla on Monday urged a judge not to award billions of dollars in shares to the lawyers who successfully challenged Elon Musk’s record pay package, painting them as freeriding opportunists attempting to cash in on the CEO’s hard-fought successes.

“It’s a real-life lawyer joke,” John Reed, a partner at DLA Piper, who represents Tesla, told Chancellor Kathaleen McCormick during the day-long hearing in the Delaware Court of Chancery. An expert witness for Tesla described the fee request as an “unjustifiable windfall”.

The hearing was the first in-court gathering of the parties since a June vote in which 72 per cent of Tesla’s shareholders, excluding Elon Musk and his brother Kimbal, overwhelmingly approved the same pay package terms that McCormick rejected in January. Tesla has said that vote is grounds for McCormick to reverse her previous decision.  

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The court is set to hear arguments later this summer on how the June “ratification” vote affects the January ruling. Observers expect that McCormick will decide on the fee and ratification consequences in a single ruling later this year.

When it was cancelled by the court in January, Musk’s pay package was worth about $56bn, but since then Tesla shares have risen, giving it a value of more than $75bn. The 29mn shares requested by plaintiffs’ lawyers has similarly risen in value, from more than $5bn originally to more than $7bn now.

Greg Varallo, the lead plaintiff’s lawyer from the Bernstein Litowitz firm, described Musk’s efforts since the January ruling to reinstate the pay plan as a “clown show”. Varallo claimed that his client, Richard Tornetta, a shareholder holding fewer than 200 shares, has faced death threats from Tesla partisans.

The Wilmington courtroom was packed with dozens of lawyers on Monday. Tesla and its directors have collectively hired around 10 top law firms, both from Delaware and New York, to plead their case. Lawyers representing some Tesla shareholders, including Calpers and Cathie Wood’s Ark Invest, also registered appearances with the court.

McCormick occasionally asked questions but mostly listened intently as the sides conceded their arguments were diametrically opposed.

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In 2018, Tesla’s board granted Musk that chance to earn shares equal to more than a tenth of the company’s equity if Tesla was able to hit a series of aggressive stock price and operational milestones. Tesla’s market value went from less than $100bn when the package was granted to top $1tn just a few years later. By 2021, with each of the targets met, Musk was awarded 304mn shares.

Tornetta, the Tesla shareholder who sued, argued that the award was excessive, resulting from a Tesla board too intertwined with Musk to represent ordinary shareholders. McCormick agreed, and the plaintiff’s lawyers, led by Varallo, subsequently requested a fee equivalent to roughly 29mn Tesla shares, as remuneration for saving shareholders the 300mn shares of dilution from the rejected Musk pay package. 

Tesla and its board argued to the court that the benefit to the electric vehicle maker stemming from McCormick’s cancellation of the share grant was “unquantifiable” and that, rather receiving several billion dollars of shares, the winning lawyers were entitled to less than $15mn.

“Plaintiff’s counsel [say] that they are entitled to part of the economic miracle even though they didn’t have any role in it,” testified Daniel Fischel, a University of Chicago professor who was an expert witness for Tesla. “The rescission of the grant didn’t save Tesla $1.”

Varallo conceded that the fee would be record-shattering in absolute terms, but told the court that precedent cases allowed him to ask for one-third of the benefit to shareholders. He characterised his request of roughly 10 per cent as deliberately conservative.

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Varallo said in court papers that he would also agree to a cash fee of $1.4bn, a figure he based on the implied hourly rate from another case similar to the Tesla lawsuit.

“We are just receiving a slice of the value pie,” he told McCormick, deflecting Tesla’s claims of a windfall.

Robert Jackson, a NYU law professor and former commissioner at the Securities and Exchange Commission who testified on behalf of Tornetta, challenged Tesla’s contention that avoiding share dilution did not benefit a company: “We don’t distinguish between shares and cash, none of this [distinction] makes economics or governance sense.”

As it fights for its fee, Bernstein Litowitz is also seeking to keep the original ruling from being set aside after the Tesla shareholder vote.

Tesla, which had formed an independent committee to approve the latest pay package, wrote in court papers that the vote “may have been one of the most well-informed stockholder votes in Delaware history”. With shareholders’ stamp of approval, “Delaware law should respect that vote because it reflects the will and sound ‘business judgment’ of Tesla’s stockholder-owners”, it argued.

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Varello has maintained that there was no basis in Delaware case law for a shareholder vote to retroactively upend a court ruling.

“To put it bluntly, litigating against Tesla is never easy,” he said to the court during Monday’s hearing.

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Starmer wields the knife after shaky 100 days in office

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Starmer wields the knife after shaky 100 days in office

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After almost 100 days in office, Sir Keir Starmer on Sunday finally decided to get a grip on his stumbling administration. “Keir will always wield the knife when it needs to be done,” said one Labour MP. “Now he has.”

The departure of Sue Gray from her key role as Starmer’s chief of staff was the catalyst for Sunday’s complete overhaul of the Number 10 operation. Many were left wondering why it had taken the prime minister so long.

Starmer, who hired Gray in 2023 to help him prepare for government, had been loyal to his chief of staff in office, in spite of fierce internal criticism of her management style.

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But those close to the prime minister say that a morose and fractious Labour conference in Liverpool last month convinced him he had to draw a line under the mis-steps that had dogged his first months in office.

“Keir came back from the conference pretty chastened,” said one Labour insider. “He realised he needed to get a grip on things.”

In Liverpool party members expressed their concern at how Starmer had cut winter fuel payments for 10mn pensioners, then appeared unable to contain a row over his receipt of £32,000 in “freebie” suits and glasses.

Gray had become a lightning rod for discontent, with hostile internal briefings about her £170,000 salary and alleged “control freakery”. Labour special advisers, or Spads, claimed she was partly responsible for holding down their salaries.

Gray’s allies said all of this was grotesquely unfair on a hard-working and loyal member of the Starmer team, a view shared by many cabinet members.

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But one senior minister told the Financial Times: “It was only a question of when, not if. Not everything was her fault, but the transition to government, the situation with the Spads and the unending freebies clusterfuck were all on her and made her position untenable.”

A person close to the discussions over the Downing Street shake-up said that after returning from Liverpool — via the UN General Assembly in New York — Starmer began lamenting the fact that Gray had “become the story”. 

Gray acknowledged she had become a “distraction”. She will now take up a role as an adviser to Starmer on relations with the UK’s devolved nations and regions, but her grip on the levers of power in Number 10 is over.

The former civil servant was also blamed for being a bottleneck in appointing people to key jobs, a problem that was rectified by the prime minister on Sunday as he announced a dramatic overhaul of his team. 

Morgan McSweeney, who was on the long march in opposition with Starmer, replaces Gray as chief of staff. It was McSweeney who helped to slay the threat of the Corbynite left and then masterminded Labour’s landslide election victory in 2024.

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But some question whether he is cut out to be a chief of staff, especially given his lack of Whitehall experience. “Morgan is very popular with Labour staffers — this is like a players’ revolt in a football dressing room,” said one Labour veteran. “But he’s not the sort of person who puts things down on paper.”

There was a long-standing narrative at Westminster that McSweeney was part of a “boys club” around Starmer that was treated with suspicion by Gray. 

Starmer appointed two women to work as deputy chiefs of staff alongside McSweeney — Vidhya Alakeson and Jill Cuthbertson — a move seen by some Labour MPs as a riposte to any suggestion that the boys club had won.

Gray did not have any deputy chiefs of staff, an omission seen in Labour circles as contributing to a lack of grip at the centre and a sign of her unwillingness to share responsibility with others. “That was her choice,” said one ally of Starmer.

While Alakeson and Cuthbertson are highly regarded in Number 10 — the former is Starmer’s political director and the latter is a long-term Starmer lieutenant — Gray’s departure leaves the centre decidedly short of Whitehall experience.

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In despatching Gray to the UK’s regions and nations, he has brought into his inner circle people who were already part of his trusted gang. “It’s a circling of the wagons,” said one person close to Starmer.

The exception is James Lyons, a former Sunday Times political journalist, NHS communications chief and TikTok media executive hired by Starmer to beef up his media team, which will continue to be headed by director of communications Matthew Doyle.

Lyons will have a strategic comms role, including oversight of Downing Street’s “grid” of future announcements. It is a common complaint of Labour staffers that the grid, previously under Gray’s control, has been chaotic.

Pat McFadden, cabinet office minister and part of Starmer’s inner circle, is said by party insiders to have played a key role in the shake-up, being close to both McSweeney and Lyons. 

The result of Sunday’s upheaval is that Starmer ends his first 100 days in office with what looks more like a functioning Number 10 operation. Many Labour MPs, privately, believe it is not before time.

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‘Ridiculous and just plain false’: FEMA administrator knocks Trump’s Hurricane Helene recovery claims

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‘Ridiculous and just plain false’: FEMA administrator knocks Trump’s Hurricane Helene recovery claims
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With the federal response to Hurricane Helene becoming a major focus of the presidential campaign in the home stretch, President Joe Biden’s administration continued to push back Sunday against former President Donald Trump’s unfounded claims about storm recovery.

Appearing on ABC’s “This Week” Sunday, Federal Emergency Management Agency Administrator Deanne Criswell said her agency has all the resources it needs to respond to Helene, which ravaged parts of Florida, Georgia, North Carolina and other states.

North Carolina and Georgia are key swing states, which has heightened the political stakes for the recovery effort and the jockeying around it.

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Criswell defended FEMA’s response and shot down Trump’s claims that the agency is short on disaster relief funds because money has been diverted to help undocumented immigrants, and that help is being withheld from Republican areas, calling such assertions “frankly ridiculous and just plain false.”

“This kind of rhetoric is not helpful to people,” she added. “It’s really a shame that we’re putting politics ahead of helping people.”

Criswell noted that state and local officials have rebutted “this dangerous, truly dangerous narrative that is creating this fear.”

Trump has made a series of unfounded claims about Helene recovery at multiple events in recent days. He said at a rally in Saginaw, Michigan, Thursday that “Kamala spent all her FEMA money, billions of dollars, on housing for illegal immigrants.”

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“They have almost no money, because they spent it all on illegal immigrants,” Trump said, adding that “They stole the FEMA money, just like they stole it from a bank, so they could give it to their illegal immigrants.”

FEMA does have a housing program, the Shelter and Services Program, that provides “financial support to non-federal entities to provide humanitarian services to noncitizen migrants following their release” from detention facilities, according to its website. It has $650 million in funding this year, but that money is separate from disaster relief funds.

“No money is being diverted from disaster response needs. None,” the White House said in a news release.

Department of Homeland Security Secretary Alejandro Mayorkas told reporters during a White House press briefing last week that FEMA has enough disaster relief money to meet current needs, but not for additional storms.

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“We are meeting the immediate needs with the money that we have,” Mayorkas said. “We are expecting another hurricane hitting.  We do not have the funds.  FEMA does not have the funds to make it through the season and… what is imminent.”

Congress recently appropriated $20 billion in disaster funds, but Biden said in a letter this week that more is needed.

“Without additional funding, FEMA would be required to forego longer-term recovery activities in favor of meeting urgent needs,” Biden wrote, saying the Small Business Administration is particularly in need of funds.

Fact Check Image of Donald Trump wading through flood water is AI-generated

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House Speaker Mike Johnson, R-La., was asked on “Fox News Sunday” about Biden’s letter and said “Congress will provide, we will help the people in these disaster prone areas.”

Johnson was pressed about Trump conflating FEMA funds for the Shelter and Services Program with disaster relief money and conceded that “the streams of funding are different, that is not an untrue statement of course.” But he argued FEMA shouldn’t be spending any money “for resettling illegal aliens who have come across the border.”

Trump continued to criticize the Helene recovery effort at a rally in Butler, Pennsylvania, Saturday. He zeroed in on the $750 payment FEMA offers disaster victims to help them with immediate needs.

“Remember, $750 to people whose homes have been washed away, and yet we send tens of millions of dollars to foreign countries that most people have never heard of,” Trump said. “They’re offering them $750 as they’ve been destroyed. “

The $750 Serious Needs Assistance helps “cover essential items like food, water, baby formula, breastfeeding supplies, medication and other emergency supplies,” according to the White House press release.

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“There are other forms of assistance that you may qualify for to receive, and Serious Needs Assistance is an initial payment you may receive while FEMA assesses your eligibility for additional funds,” the release continues.

Republican National Committee co-chair Lara Trump, the daughter-in-law of the former president, also answered questions about Trump’s Helene claims during an appearance on CNN’s “State of the Union” Sunday. Host Dana Bash played a clip of Sen. Thom Tillis, R-N.C., praising the response to Helene.

“I’m actually impressed with how much attention was paid to region that wasn’t likely to have experienced the impact that they did,” Tillis said, adding “I’m out here to say that we’re doing a good job.”

‘Life-threatening’: Milton forecast to become hurricane, target battered Florida

Lara Trump defended the criticism of Helene recovery as “coming directly from people there.”

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“You can go online, you can look at videos of people recording themselves and posting online saying: ‘We need help, no one has come here, we have nothing,” Trump said.

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Trump’s Rambling Speeches Reinforce Question of Age

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With the passage of time, the 78-year-old former president’s speeches have grown darker, harsher, longer, angrier, less focused, more profane and increasingly fixated on the past, according to a review of his public appearances over the years.

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