Tesla plaintiff Richard J. Tornetta is suing, saying the company was at fault for giving Musk his compensation package in 2018, which shareholders approved at the time. Tesla said it would be worth nearly $56 billion at the time, with a net worth of $50.9 billion today.
Musk’s testimony came shortly after 9 a.m. in the Delaware Court of Chancery in Wilmington as Musk asserted his control over Twitter. A final warning To become “more hardcore”, “work longer hours at higher intensity” or leave the company.
Musk began the day under questioning from his defense attorney and the plaintiff’s attorney, where they asked him about Tesla’s governance and time spent at the company and his relationship with the board, which is supposed to be independent of Musk. Representing shareholders. Musk acknowledged his friendships with team members, including some shared family vacations. Under questioning, Musk defended himself, saying he was committed to increasing Tesla’s market value, but acknowledged that he sometimes doesn’t get the board’s approval for public statements.
The lawsuit alleges that Musk’s huge pay package is unfair enrichment, and that the board failed to fulfill its legal duty to act in the best interest of Tesla shareholders. The lawsuit describes Musk as a “part-time CEO” because he leads other initiatives. One of the points of contention in the case is whether Tesla’s board is truly independent of Musk and represents shareholders, or whether he had undue influence on the board to pay him such a large salary.
Musk controls more than 20% of all outstanding Tesla shares, including unexercised options.
Musk initially denied on Thursday that he was negotiating against himself over how many shares he would receive in the pay package. (Negotiating against himself would give Musk total control over the outcome and raise bigger questions about the board and whether it’s fulfilling its fiduciary responsibilities.)
But the plaintiffs’ attorney, Gregory Varallo, recounted some of Musk’s testimony, in which he said at one point about the pay package, “I think I’m negotiating against myself.”
Musk acknowledged this. It was one of several occasions when Varallo appeared to highlight inconsistencies in Musk’s current and previous statements.
Three minutes into the question, Musk said he believed the board of directors had been consulted before changing his title to “technocking.”
Varallo later read back Musk’s comments, in which Musk said he had not consulted with the board about the title change.
Musk said in his re-recorded testimony in court Wednesday that he was the person who came up with the vision for Tesla.
But Musk struck a different tone in court Wednesday, resisting being asked a yes-no question.
“I believe you are asking complex questions where yes or no is possible. “Yes is more accurate than no,” Musk said Wednesday. “But your question is a complicated question that is often used to mislead people.”
Varallo highlighted the amount of control Musk has over Tesla.
Musk recently said he did not receive approval when he announced a potential stock buyback. He also said he did not approve, saying he saw the path for Tesla to become more valuable than the world’s most valuable companies, Apple and Saudi Aramco.
The plaintiff’s attorneys described the package this week as close to the GDP of the entire state of Delaware and more expensive than building the World Trade Center. They compare Musk’s compensation to the average Tesla salary, which they say is $40,000.
While the lawsuit focused on Musk’s compensation, the plaintiffs’ attorneys raised a range of questions about Tesla’s management. Asked when he tweets about Tesla, Musk demurred.
“We are cross-examining an interesting case, Mr. Musk,” Varallo fired back. “So if your attorney wants to make an objection, he’s entitled to do that, but unfortunately you didn’t. I doubt he would if he didn’t like the question.’
The exchange led Musk to reiterate his point Reviews of the SEC.
“The consent order was made under duress,” Musk said Wednesday, referring to a 2018 settlement with the SEC over what Musk said was “financially secured” to take Tesla private for $420 a share. “An agreement made under duress is not valid as a foundation of law.”
At a TED conference earlier this year, Musk said he agreed to a settlement because if he continued to fight the SEC, Tesla’s banks would stop financing at a time when they needed money. “I was forced [to lie] That’s the only reason to save Tesla’s life,” Musk said at the April event.
Come on then He asked if Musk had any legal training. Musk described some familiarity.
“If you’re in enough cases, pick up some things along the way,” Musk said.
Tesla executives have defended Musk’s pay package in two days of testimony so far.
“It drives him to achieve bold and daring things and he devotes his time and energy to it in opposition to his other interests,” Tesla board chairman Robin Denholm testified Tuesday. He said Musk is interested in funding interplanetary travel. Beyond Tesla, Musk is the CEO of SpaceX, the owner of Twitter, as well as leading the Boring Company, which specializes in underground tunnels, and is the founder of Neuralink, which seeks to put computer chips into people’s brains.
Musk’s compensation package targets were characterized as lofty and incredibly difficult to achieve.
Former Tesla chief financial officer Deepak Ahuja described the project as “very high risk, high reward”.
“Although I deeply believe in Tesla, I felt the difficulty level of these milestones was too high and for a guy like me, I didn’t see it as a compelling incentive program on a personal level,” Ahuja said.
According to emails read in court by the plaintiff’s lawyers, Musk warned shareholders that he was “deeply offended” by the lack of support, warning that dissenters would not be welcome at any of his companies.
Chris Isidore contributed to this story.