Elon Musk, who is already busy hacking Twitter, is expected to face a lawsuit on Wednesday, November 16, regarding the more than $50 billion compensation plan awarded to him by Tesla’s board of directors. He must testify in the Delaware court, where the trial against the social network was supposed to take place, before he decides to fulfill his obligation and pay 44 billion dollars to buy Twitter at the end of October.
The case brought before him on Wednesday follows a complaint by a shareholder in the electric car maker who sued Tesla, its chief executive and some of its board of directors in 2018. “the largest executive compensation program ever”. The latter plans to pay Elon Musk $56 billion in Tesla shares based on the achievement of several ten-year goals. After doing almost all of them, the leader pocketed $52.4 billion in stock options over four and a half years. It’s enough to fuel his fortune and help him rise to the title of the richest man in the world.
According to plaintiff Richard Tornetta, Elon Musk did not need these financial incentives to achieve these goals. But he dictated his terms to directors who, given their relationship with the iconic entrepreneur or their personal interests, were not independent enough to oppose it. And that’s when he didn’t even work full-time at Tesla as much as he also ran space company SpaceX and startups Neuralink and The Boring Company. Richard Tornetta asks to cancel the plan.
“Unusually ambitious and challenging” goals
Lawyers representing the defendants argue that Elon Musk’s compensation plan is tied to the company’s performance, including in the stock market, and that it has worked so well that Tesla’s value has increased more than 10-fold since its adoption. The trial, without a jury, began Monday with testimony from Ira Ehrenpreis, head of compensation for Tesla’s board of directors. He assured that the set tasks were done “Extraordinarily Ambitious and Challenging” and pointed out that the board wanted to push Elon Musk to focus on Tesla when the company was still struggling to grow. Robin Denholm, the current president of this body, gave a speech on Tuesday.
The judge in the case is Kathleen McCormick, who also took care of the file against Elon Musk on Twitter. He should make his decision in a few months.
“Very Unusual”
He is “Very Unusual” complaints about executive compensation to reach the trial stage because they are often settled or dismissed by judges who largely believe they are strategic decisions, said Jill Fish, a professor of business law at the University of Pennsylvania. But in this case, the court decided that the fact that Elon Musk owns about 22% of Tesla’s shares and is the CEO. “May have undue influence” on the board of directors and other shareholders,” he said.
The trial, he says, is being watched by big business because of the impact it could have “procedures necessary to determine executive compensation”.. It also comes as Elon Musk has come under severe pressure since acquiring Twitter in late October, amid the departure of more than half of its employees, a flight of advertisers, warnings from various authorities and a confused launch. new products. During an intervention on Monday, he jokingly admitted that he was overwhelmed “It’s grown a lot lately”.
Source: Le Figaro
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