Tesla CEO Elon Musk Defends $56 Billion Settlement in Court
Elon Musk said in court on Wednesday that he made some decisions for Tesla Inc without the approval of the company’s directors, as he defended his $56 billion (roughly Rs. 4,56,800 crore) payment against claims that he told the board that he was complying with its terms. .
Tesla shareholder Richard Tornetta sued Musk and the board in 2018 and hopes to prove that Musk used his dominance on Tesla’s board to get an outside compensation package that didn’t require him to work full-time at the electric car maker.
Asked by Tornetta’s lawyer, Greg Varallo, Musk rejected allegations that his terms of the pay package are easy to achieve.
“The amount of pain, no words can express,” Musk said in a close whisper, describing the effort required to move the company from the brink of failure in 2017 to explosive growth. “It’s a pain I wouldn’t want to inflict on anyone.”
Varallo repeatedly tried to portray Tesla as a company under the control of Musk, the richest person in the world, and tried to show that Musk bypassed Tesla’s board several times.
For example, Musk said he made a joint call about ending Tesla’s acceptance of the Bitcoin cryptocurrency and admitted the board was not told before he told analysts in October that Tesla’s board was considering buying up to $10 billion (roughly Rs. 81,600 crore) of shares. .
But the testimony did not provide clear evidence of who developed Musk’s 2018 pay package or whether it was a product of his own interests rather than board negotiations.
The five-day trial comes as Musk struggles to oversee a tumultuous overhaul of Twitter, which he was forced to buy for $44 billion (roughly Rs, 3,58,900 crore) in a separate legal battle before the same judge, Chancellor Kathaleen McCormick, after he tried to back out of that agreement.
Musk wrote on Twitter this week that he was staying at Twitter’s headquarters in San Francisco around the clock until he fixed the company’s problems, and said on Wednesday that he had come to Delaware on an overnight flight from the communications company.
Musk said his focus on restructuring Twitter will soon end and he will find someone else to lead it. He rejected the argument that his salary agreement should have bound him to spend a set number of hours at Tesla.
“I work hard all the time,” he said. “I don’t know what a punch clock can do.”
Although Musk has a history of conflicting testimony, calling lawyers “guilty” or “a bad person,” he was tight-lipped about Wednesday’s proceedings, though he sometimes expressed frustration with Tornetta’s lawyer.
At one point, Musk told the plaintiff’s attorney, “Your question is a tricky question that is often used to mislead people.”
Musk admitted he wasn’t a lawyer but added, “when you’re in enough courts you pick up a few things.”
Tornetta asked the court to set aside the 2018 package, which his lawyer said was $20 billion (roughly Rs. 1,63,100 crore) greater than the annual gross domestic product of the state of Delaware.
Musk’s legal team and Tesla’s directors framed the pay package as a set of firm targets that worked to fuel a 10-fold growth in Tesla’s stock price, to over $600 billion (roughly Rs. 48,92,800 crore) from around $50. billion (approximately Rs. 4,07,700 crore).
They argued that the plan was created by independent board members, advised by outside experts and input from major shareholders.
Tornetta’s lawyer tried to show that Musk was involved from the beginning. An email from May 2017 appeared to indicate that Musk had been looking for a pay plan for months before the board interviewed him.
“I’m planning something really crazy, but also very dangerous,” he wrote.
Antonio Gracias, a venture capitalist and longtime friend of Musk’s who was also a Tesla board member from 2007 to 2021, took the position after Musk testified.
Gracias said he is willing to push back against Musk if necessary. “I don’t have a fight with my boss,” he told the court.
Tesla’s controversial package allows Musk to buy 1 percent of Tesla stock at a deep discount each time incremental performance and financial goals are met. Otherwise, Musk gets nothing.
Tesla has hit 11 of 12 targets, according to court documents.
Shareholders are generally unable to challenge higher compensation because the courts often overrule the directors’ decision. Musk’s case survived a motion to dismiss because it was ruled that he could be considered a shareholder, meaning stricter rules apply.
Gracias described Musk as essential to the company’s success in his testimony, calling him “extraordinary” and a “brand genius.”
© Thomson Reuters 2022