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Elon Musk claims in court that he had a limited role in determining the compensation for his company, Tesla

BusinessElon Musk claims in court that he had a limited role in determining the compensation for his company, Tesla

Elon Musk testified on Wednesday that he was not engaged in Tesla board deliberations over his 2018 compensation package, which included stock options worth billions of dollars and helped make him the world’s wealthiest person.

In a courtroom in Wilmington, Delaware, Mr. Musk fought back against allegations in a shareholder complaint that the board of the electric vehicle firm was filled with his pals and other close associates who followed his bidding.

The dispute, in which Mr. Musk appeared for less than three hours, revolves on a pay plan that granted Mr. Musk the chance to purchase almost $50 billion in Tesla shares provided the firm fulfilled specific sales, profit, and share price benchmarks. At the time, the transaction was one of the biggest of its type, and it has since served as a model for the compensation of top executives by many other corporate boards.

In court records, attorneys for Richard Tornetta, the shareholder who filed the lawsuit, claim that in April 2017 Mr. Musk began to sketch the pay plan with Ira Ehrenpreis, the chairman of the board’s remuneration committee. The plaintiff’s attorneys have said in court documents that Tesla directors and executives stated in depositions that the board did not anticipate Mr. Musk to leave the business and had not started identifying prospective successors.

In his testimony, Mr. Musk seemed to refute a contention in the case that the approximately 22 percent of Tesla stock he already held was sufficient motivation. In the midst of an existential fight to scale up production of the company’s first mass-market vehicle, the Model 3, he expressed a desire to leave Tesla.

Mr. Musk said, “We were at a crossroads where we had to determine whether I would manage the firm or someone else would.” I did not want to be CEO.

Antonio Gracias, who served on Tesla’s board until last year, said on Wednesday evening that the board had contemplated replacing Elon Musk as CEO so that he could concentrate on the company’s products. He stated that the committee never identified a good candidate.

The attorneys for Mr. Musk and Tesla’s directors filed a move to dismiss the lawsuit, but in 2019 another Delaware court allowed the majority of the case to continue.

The case is being considered by the Chancellor of the Delaware Court of Chancery, Kathaleen McCormick. She also ruled over the brief litigation that Twitter brought against Mr. Musk in July to compel him to complete the purchase of the social media business after he attempted to back out of the transaction. Mr. Musk finalised the transaction last month.

More than a year after the 2018 Tesla pay agreement was implemented, the company’s shares began surging significantly, rising from roughly $21 to a November top of almost $400. Since then, it has decreased by more than 50 percent and now trades about $187.

In addition to defending himself, Mr. Musk used his time on the witness stand to address some of his favourite talking points, such as how Tesla single-handedly created the electric car industry and why he despises the Securities and Exchange Commission and investors who bet against Tesla’s share price.

Mr. Musk responded to a query from Evan Chesler, a lawyer for Tesla, that looked aimed to demonstrate that he had earned his salary by stating, “Tesla has had an enormous impact on the globe.” “It’s not only that Tesla manufactures electric cars; we’re the primary reason why the rest of the auto industry has shifted to sustainable electric automobiles.”

Mr. Musk lashed out at the S.E.C. in response to shareholder attorney Gregory Varallo’s questions that was intended to demonstrate that Mr. Musk did not always respect authority. The commission accused him of securities fraud for stating he had “acquired finance” to take Tesla private in August 2018. Mr. Musk resigned as chairman of Tesla, paid a fine, and agreed to have a lawyer review some of his Tesla-related social media statements. In April, a federal court denied Mr. Musk’s effort to terminate his deal with the SEC.

Mr. Varallo posed a series of questions intended to demonstrate that Mr. Musk operates with minimal control from the Tesla board, as seen by his deployment of Tesla engineers to assist him on Twitter.

The testimony of Mr. Musk concluded at noon. The trial will conclude by the end of the week. It is anticipated that Chancellor McCormick will decide on the matter in the next weeks or months.

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