Elon Muskknown for his fierce testimony, appeared in a Delaware court to defend himself against claims involving his $56 billion Tesla Inc The compensation package was based on simple performance targets and approved by a compliant Board of Directors.
musk began answering questions from his attorney about his story Tesla and described how the company was struggling to survive in 2017 when the salary package was being developed.
“I thought it was extremely unlikely,” he replied when asked if he thought Tesla would succeed at the time.
Tesla shareholder Richard Tornetta sued Musk and the board in 2018, hoping to prove that Musk used his dominance on the electric vehicle maker’s board to dictate the terms of the package, which did not require him to work full-time at Tesla.
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Musk’s testimony to the Chancellor Catherine McCormick comes as he struggles to oversee a chaotic overhaul Twitter Incthe social media platform, which he was forced to buy for $44 billion in a separate lawsuit before the same judge after trying to back out of that deal.
Investors are increasingly concerned about Musk’s focus on Twitter, and at the booth, the billionaire said he’s focusing his attention where it’s needed most, which was Tesla in 2017.
“So in times of crisis, the allocation shifts to where the crisis is,” said Musk, who wore a dark suit and tie.
Musk, the world’s richest person, tweeted this week that he will remain at Twitter’s San Francisco headquarters 24/7 until he fixes the company’s problems.
Tornetta has asked the court to vacate the 2018 package, which Tornetta’s attorney did Gregory Varallo said, was $20 billion larger than Delaware’s annual gross domestic product.
Musk’s legal team and Tesla directors, who are also defendants, framed the pay package as a bold set of goals that would result in a 10x growth in Tesla stock value from around $50 billion to more than $600 billion. dollars worked.
They have argued that the plan was developed by independent board members, advised by outside experts and with input from major shareholders.
On Monday and Tuesday, the court got a taste of Musk’s testimony through short clips from his 2021 testimony in the lawsuit. In a clip, Musk dismissed the idea that the board should have discussed spending more time with Tesla.
“That would have been silly,” said Musk, who is also CEO of rocket company SpaceX and tunneling company The Boring Co.
Musk has a history of argumentative statements and often comes off as contemptuous of attorneys who ask probing questions. He has called opposing lawyers “reprehensible”, questioned their luck and accused them of “blackmail”.
Last year, Musk told an attorney for a shareholder who was suing him over the 2016 acquisition of SolarCity that he was “a bad person.”
Musk can also show his charm in court. He apologized from the booth to a British diver, whom he tweeted “pedo guy” and who sued Musk for defamation. The jury in the case found that Musk had not defamed the diver.
The controversial Tesla package allows Musk to buy 1% of Tesla stock at a deep discount each time escalating performance and financial goals are met. Otherwise Musk gets nothing.
According to court records, Tesla hit 11 of the 12 targets.
Shareholders generally cannot challenge executive compensation because courts typically rely on the judgment of directors. The Musk case survived a motion to dismiss because it was determined he could be considered a controlling shareholder, meaning stricter rules apply.
“There is no instance where a 21.9 percent shareholder who is also the CEO has received a structured payout plan of this magnitude,” Lawrence CunninghamProfessor of Corporate Law at the George Washington Universitysaid the lack of precedents.
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