Musk to testify at trial over his $50 bn Tesla compensation
– Elon Musk, founder and CEO of Tesla, will testify in a trial over his $50 billion salary on Wednesday.
To ensure his takeover of the social media network Twitter goes through, Musk will appear in the same Delaware court where he faced a lawsuit from the company.
Musk has been under intense criticism after his $44 billion acquisition of Twitter, during which he reportedly laid off thousands of employees, frightened off advertisers, and allowed false accounts to flourish on the network.
In the separate Tesla lawsuit, shareholder Richard Tornetta filed a complaint claiming that Musk and the board of directors breached their fiduciary obligations by approving the compensation package.
Tornetta claims Musk imposed conditions to directors who were too in thrall to their star CEO to raise objections to a compensation plan worth around $51 billion based on current share prices.
The Tesla investor has accused Musk of “unjustified enrichment” and requested the cancellation of a compensation plan that contributed to Musk’s meteoric rise to wealth.
After almost all of Tesla’s goals were accomplished, Musk reportedly made the equivalent of $52.4 billion in stock options over a period of four and a half years.
The whole cost of the strategy was estimated at $56 billion when it was approved.
On the first day of the bench trial, Monday, Ira Ehrenpreis, chairman of Tesla’s board of directors’ pay committee, testified that the company’s goals were “extraordinarily ambitious and complex.”
Ehrenpreis said that the board was trying to get Musk’s undivided attention while Tesla was still having trouble getting off the ground.
The trial, which began on Monday and will continue through Friday, is being presided over by the same judge who was scheduled to hear the Twitter case.
Her choice might take as long as a few months to make because of this.
The trial of such a case is “very exceptional,” according to Jill Fisch, a law professor at the University of Pennsylvania, who spoke with AFP.
In addition, “courts have traditionally considered this as a business choice,” so “there aren’t all that many successful challenges to CEO remuneration,” she said.
She pointed out that Musk “may have an unfair effect” on the board and other shareholders given his position as CEO and his ownership of around 22 percent of Tesla.
This past Sunday, Musk was scheduled to appear in person at a G20-related event in Bali, but he had to bow out to attend court.
When asked why he had not visited the tropical island in Indonesia, Twitter’s new CEO responded jokingly that his “workload has lately grown quite a lot” since he took over the company.
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