Musk’s pay trial asks if Tesla’s growth justifies $56 billion compensation

Must read

Elon Musk’s Twitter says it has good reason not to pay for $200,000 private jet trip: The company overbilled us

Twitter Inc. fired back at a private jet provider that sued over unpaid bills, saying the company overcharged for the social media giant’s head...

Elon Musk’s false ‘funding secured’ tweet caused Tesla investors ‘consequential harm’ to the tune of $12 billion, jury told

Tesla investors lost $12 billion over 10 days as a result of Elon Musk’s famous tweet in 2018 that he had “funding secured” to...

Governments need to work with the private sector to solve their trust crisis

Democracies everywhere are experiencing a trust crisis. Polling by the global public relations firm Edelman shows that from 2021 to 2023...

Air travelers would get $1,350 if bumped under proposed ‘passenger bill of rights’ that comes just weeks after Southwest Airlines’ epic meltdown

Senators who want to impose tougher penalties when U.S. airlines strand or delay passengers say they finally might be able to turn their ideas...

Investing.com - Financial Markets Worldwide

Please try another search

Stock Markets 8 hours ago (Nov 18, 2022 06:16PM ET)

2/2

Musk's pay trial asks if Tesla's growth justifies $56 billion compensation © Reuters. FILE PHOTO: Elon Musk, Chief Executive Officer (CEO) of SpaceX, Tesla and Twitter, arrives for a trial about his Tesla pay package at the Delaware Court of Chancery in Wilmington, Delaware, U.S., November 16, 2022. REUTERS/Evelyn Hockstein/File Photo

2/2

By Tom Hals

WILMINGTON, Del. (Reuters) – After five days of testimony, including three hours from Elon Musk, a Delaware judge will now decide whether Musk’s $56 billion pay package from Tesla (NASDAQ:) Inc was justified by the company’s explosive growth or undermined by a flawed process.

Musk and the Tesla directors named as defendants repeatedly testified that the package achieved what it set out to do — deliver 10-fold growth in the company’s stock price, enriching investors and Musk.

“We thought if we could pull this off, if this plan was executed, Tesla would be one of the most valuable technology companies,” Antonio Gracias, a Tesla board member from 2007 to 2021, told the Delaware Court of Chancery on Wednesday. “It was a great deal for the shareholders.”

The trial seeks to resolve claims by shareholder Richard Tornetta that the 2018 pay package was dictated by Musk, the world’s richest person, to subservient directors and approved by a vote of shareholders who were misled by Tesla.

The trial wrapped up on Friday, as Musk struggles to oversee a chaotic overhaul of Twitter Inc (NYSE:), which he was forced to buy for $44 billion in a separate legal battle before the same judge, Chancellor Kathaleen McCormick (NYSE:).

“My sense is that even though it went all the way to trial, a ruling is going to favor Mr. Musk,” said Eric Talley, a professor at Columbia Law School who has followed the case.

It will be months before McCormick rules and her decision can be appealed to the Delaware Supreme Court.

During the week-long trial, directors said the pay package was meant to ensure Musk guided the electric vehicle maker through a critical phase when he could have focused on his rocket company SpaceX or tunneling venture The Boring Co.

Musk told the board he wanted a huge package to finance his dream of travel to Mars, or as he testified, to make “life multi-planetary in order to ensure the long-term survival of consciousness.”

Musk described his efforts to push the company from the brink of failure in 2017 to exponential growth. “The amount of pain, no words can express,” Musk testified on Wednesday.

Gracias recalled that Musk celebrated his birthday in a factory conference room with a grocery store cake. “This was all hands on deck, 24/7, brutal,” he told the court.

The package allows Musk to buy 1% of Tesla’s stock at a deep discount each time escalating performance and financial targets are met. Otherwise, Musk gets nothing.

Tesla has hit 11 of the 12 targets as its value ballooned briefly to more than $1 trillion from $50 billion.

Tornetta wants the plan rescinded and the stock granted under the plan returned to Tesla.

Much of the trial focused on the information provided to shareholders before they approved the plan. Tornetta’s lawyers tried to show Tesla concealed that three targets of the package were likely to be quickly met.

The plaintiff portrayed the directors as personal friends or business partners of Musk, who was the link to their wealth.

The directors tried to show they could hold the line against Musk’s demands. But evidence of extracting concessions was limited to the best method for accounting for the stock grants and a requirement that Musk had to hold his stock for five years.

“It wasn’t a knock-down, drag-out affair,” Todd Maron testified about the pay talks in 2017 when he was general counsel.

Talley said Musk is a unique CEO and his pay reflects that.

“He’s like a Labrador retriever. He sees a ball and he runs after it. You could almost make an argument they didn’t pay him enough because he ran off after Twitter.”

Related Articles

Carvana cuts 8% of workforce on slowing used-car demand

Carvana cuts 8% of workforce on slowing used-car demand By Reuters – Nov 18, 2022 5

By Nathan Gomes (Reuters) -Carvana Co on Friday announced another round of job cuts that will impact about 1,500 employees, or 8% of its workforce, as it attempts to cut costs…

Biden asks U.S. Supreme Court to lift block of student loan relief plan

Biden asks U.S. Supreme Court to lift block of student loan relief plan By Reuters – Nov 18, 2022 8

By Andrew Chung (Reuters) -President Joe Biden’s administration on Friday asked the Supreme Court to lift a lower court’s order blocking his plan to cancel billions of dollars in…

More articles

Latest article

Elon Musk’s Twitter says it has good reason not to pay for $200,000 private jet trip: The company overbilled us

Twitter Inc. fired back at a private jet provider that sued over unpaid bills, saying the company overcharged for the social media giant’s head...

Elon Musk’s false ‘funding secured’ tweet caused Tesla investors ‘consequential harm’ to the tune of $12 billion, jury told

Tesla investors lost $12 billion over 10 days as a result of Elon Musk’s famous tweet in 2018 that he had “funding secured” to...

Governments need to work with the private sector to solve their trust crisis

Democracies everywhere are experiencing a trust crisis. Polling by the global public relations firm Edelman shows that from 2021 to 2023...

Air travelers would get $1,350 if bumped under proposed ‘passenger bill of rights’ that comes just weeks after Southwest Airlines’ epic meltdown

Senators who want to impose tougher penalties when U.S. airlines strand or delay passengers say they finally might be able to turn their ideas...

How the airline industry is using A.I. to improve the entire experience of flying

When Swiss International Air Lines began to use A.I. technology to boost efficiency, the carrier was able to better optimize more than half the...