Judge to decide if Tesla’s Musk’s $56 million pay package justifies company’s growth – National

Judge to decide if Tesla’s Musk’s $56 million pay package justifies company’s growth – National

After five days of declaration, including three hours Elon MuskA Delaware judge will now decide Musk’s $56 trillion payout package Tesla Inc was justified by the company’s explosive growth or undermined by a flawed process.

Musk and Tesla TSLA.O executives have repeatedly declared that the package achieved what it set out to do: a 10-fold increase in the company’s stock price, enriching investors and Musk.

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“We thought that if we could pull this off, if this plan went through, 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 lot for the shareholders.”

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The trial seeks to resolve shareholder Richard Tornetta’s claims that his 2018 pay package was approved by Musk, the world’s richest man, through shareholder votes that were subservient to executive orders and misled by Tesla.

The trial ended Friday as Musk struggles to oversee a chaotic overhaul of Twitter Inc, a legal battle before the same judge he was forced to buy for $44 billion, Chancellor Kathaleen McCormick.

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“My belief is that even if it goes to trial, a verdict will go in Mr. Musk’s favor,” said Eric Talley, a professor at Columbia Law School who has followed the case.

It will be months before McCormick decides and can appeal his decision to the Delaware Supreme Court.

During the week-long trial, executives said the pay package was designed to ensure Musk led the electric vehicle maker through a critical phase, whether it was at his rocket company SpaceX or The Boring Co.

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Musk told the board he wanted a large package to fund his dream of traveling to Mars, or as he declared, “to make life multiplanetary, to ensure the long-term survival of consciousness.”

Musk described his efforts to push the company from the brink of bankruptcy to exponential growth in 2017. “The amount of pain, words cannot express,” Musk testified on Wednesday.

Gracias recalled that Musk celebrated his birthday with a grocery store cake in a conference room at the factory. “This was all behind the scenes, 24/7, brutal,” he told the judge.

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

Tesla has achieved 11 out of 12 targets as its value has gone from over $50 billion to $1 trillion.

Tornetta wants the plan canceled and the shares awarded under the plan returned to Tesla.

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

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The plaintiff portrayed the executives as Musk’s personal friends or business partners, who were linked to their wealth.

The executives tried to show that they could keep up with Musk’s demands. But evidence of the concession draw was limited to the best method of accounting for stock grants and a requirement that Musk hold his stock for five years.

“It wasn’t a fallout issue,” Todd Maron testified about the 2017 salary negotiations when he was general counsel.

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

“He’s like a Labrador retriever. He sees a ball and runs after it. You could almost make an argument that they haven’t paid him enough because he’s run away from Twitter.”

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Daniel Wallis)

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