Elon Musk testified that he had little say in his Tesla Pay
Elon Musk testified Wednesday that he was not involved in discussions among Tesla board members over a 2018 pay package that gave him billions of dollars in stock options that helped make him the world’s richest man .
Speaking in a courtroom in Wilmington, Delaware, Mr. Musk rejected allegations in a shareholder lawsuit that the electric car company’s board was made up of friends and others close to him who did his bidding.
“I was totally focused” on running Tesla, he said.
The case in which Mr. Musk testified centered on a compensation package that gave Mr. Musk stock options that gave him the right to acquire nearly $50 billion in Tesla stock if the company met certain revenue targets , profit and share price increase. At the time, the deal was one of the largest of its kind and became a template used by many other corporate boards for CEO compensation.
In court documents, lawyers for the shareholder who brought the suit, Richard Tornetta, said that in April 2017, Mr. Musk began to outline the pay deal with the director, Ira Ehrenprice, who heads the board’s compensation committee. The plaintiff’s lawyers also said in court documents that Tesla directors and executives had said in testimony that the board did not expect Mr. Musk to leave the company and had not begun to identify potential successors.
On the stand, Mr. Musk also appeared to refute the lawsuit’s contention that the shares he already owns in Tesla — about 22 percent of the company — are enough of an incentive. Amid an existential struggle to ramp up production of the company’s first mass-market car, the Model 3, he said he was considering leaving Tesla.
“We were at an inflection point where we had to decide whether I was going to run the company or somebody else was going to run the company,” Mr. Musk said. “I didn’t want to be a CEO”
Lawyers for Mr. Musk and Tesla executives filed a motion to dismiss the case, but in 2019 another Delaware judge allowed most of the case to proceed.
The case is heard by Chancellor Kathleen McCormick of the Delaware Court of Chancery. She also presided summary trial Twitter filed a lawsuit in July against Mr. Musk to force him to go through with acquiring the social media company after he tried to back out of the deal. Mr. Musk closed the deal last month.
More than a year after Tesla’s 2018 pay deal was struck, the company’s stock began a sharp rise, going from about $21 to a peak of about $410 in November 2021. It has since fallen about 50 percent and is now trading at about 190 dollars.
In addition to his defense, Mr. Musk used his time on the witness stand to address some of his favorite talking points, including how Tesla single-handedly built the electric car business and why he hates the Securities and Exchange Commission and investors. who bet against Tesla stock prices.
“Tesla has a huge effect on the world,” Mr. Musk said in response to a question from a lawyer representing Tesla, Evan Chesler, who appeared to aim to show that he deserved his salary. “Not only is Tesla making electric vehicles, we’re really the main reason why the rest of the auto industry is moving toward sustainable, electric vehicles.”
Under questioning from Gregory Varallo, a lawyer representing the shareholders, who appeared to aim to show that Mr. Musk does not always defer to authority, Mr. Musk lashed out at the SEC. The commission charged him with securities fraud because he said in August 2018 that he had “secured financing” to take Tesla private. To resolve that case, Mr. Musk stepped down as Tesla’s chairman, paid a fine and agreed to have a lawyer review some of his social media posts about Tesla. In April, a federal judge rejected a request by Mr. Musk to end his settlement with the SEC
Mr. Varallo asked a series of questions designed to show that Mr. Musk operates with little oversight from Tesla’s board, such as assigning the car company’s engineers to help him on Twitter.
“Has anyone suggested to you that it might not be a good idea to use the resources of a public company for a private company?” Mr. Varallo said.
Mr. Musk responded that the engineers came voluntarily and did the work in their own time. “It was very short,” he said. “It went on for a few days and then it was over.”
Mr. Varallo then asked: “Did any of these so-called independent directors call you and say this might not be a good idea?”
“I don’t believe I got a call,” Mr Musk replied.
Mr. Musk spoke quietly in response to some questions, giving one-word answers. On other subjects, however, he spoke at length.
At one point relatively early in his testimony, Chancellor McCormick expressed frustration with Mr. Musk’s digressions, saying, “I’m going to cut Mr. Musk off because we can all listen to this all day. It’s very interesting, but I don’t think it answered the question, which I’ve already forgotten.’
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