A trial challenging Elon Musk’s $56 billion pay at Tesla Inc could hang on whether misleading disclosures to shareholders would void a compensation plan, which the judge hearing the dispute called “a kill shot”. ” Said.
In closing arguments Tuesday in a Delaware court, a judge pressed lawyers representing Tesla’s directors and the investor challenging Musk’s pay on whether the company’s explosive growth in 2018 was outweighed by misleading disclosures about a pay plan .
In arguments following a five-day trial in November at the Court of Chancery, the Tesla chief executive testified about the origins of his 2018 pay package and whether its performance targets were difficult to achieve.
The pay package contributed to Musk’s fortune as the second largest in the world, and has no comparison in the world of executive salaries. Tesla investor Richard Tornetta sued Musk and the board in 2018, arguing that Musk had unjustly enriched himself and should be voided.
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Torneta’s attorney, Greg Varallo, told Chancellor Kathleen McCormick that because the plan was based on a shareholder vote, any misleading information given to shareholders meant the plan should be cancelled.
He said investors were never told that Musk dictated the plan to the board or that the company’s directors, who were allegedly independent, were indebted to Musk through personal and business relationships.
McCormick called their argument a “kill shot” and said it was “elegant” but she was skeptical. He asked both sides to provide additional information on the argument.
Lawyers for the Tesla directors argued that Tornetta never challenged key details of the proxy describing the plan, such as the goals Musk was supposed to accomplish.
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The directors’ attorneys argued that if McCormick determined that statements about Musk’s director relationships were misleading, he should decide whether the plan was fair to shareholders. The directors’ legal team argued that this was because it caused a 10-fold increase in Tesla’s share price.
“The shareholders took their view,” said Daniel Slifkin, an attorney for the Tesla board. “Shouldn’t Mr. Musk be considering them?”
The package allows Musk to buy 1% of Tesla’s stock at a deep discount, increasing each time performance and financial goals are met. If the goals are not met, Musk receives nothing, although his wealth still rises when Tesla stock rises because he is a major shareholder.
Tesla has achieved all 12 goals, according to Varallo, as Tesla’s value grows from $50 billion to $1 trillion in 2021, when the package was negotiated.
Musk, who also runs the rocket company SpaceX, told the court during the trial that he considered the pay package as a way to fuel his ambitions for interplanetary travel.
“It’s a way to get humanity to Mars,” he testified in November. “So Tesla could potentially help achieve that.”
McCormick’s decision could take months.
The text of this story is published from a wire agency feed without any modification.
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