Elon Musk defends in court his remuneration of 55,000 million dollars as head of Tesla

Elon Muskin the eye of the hurricane for his stormy entry into Twitter, said this Wednesday before a Delaware court that he played no role in closing in 2018 a compensation of 55,000 million dollars for directing Teslathe manufacturer of electric cars, also in the pillory for the fatal accidents of some vehicles. Musk, the richest man in the world, assured that by assuming the management of Tesla his only objective was to make a pioneering company in the sustainable automotive sector viable.

Musk discreetly arrived in Wilmington, the seat of the court, in a black Tesla that he parked behind the building, in front of a tent set up to guarantee maximum privacy for the businessman. Dressed in a black suit and tie, he passed through the security arch, entered the courtroom and sat down before Judge Kathaleen McCormick of the Delaware Chancery.

“I have no knowledge of the internal processes by which this compensation structure was reached,” he said in a brief appearance about his compensation, on the third day of the trial for a lawsuit filed by a minority investor, Richard Tornetta, head of nine shares, who affirms that the payment received by the tycoon was excessive and that it must be returned to the company. Musk insisted that he never discussed his hefty compensation with the board of directors, let alone dictated or enforced the terms of the deal.

However, the case documentation shows that the businessman was asked in a text by his friend Ira Ehrenpreis, a Tesla board member, on April 8, 2017, about how to articulate his future compensation. Musk replied that he should end up “owning 10% of the company” in a compensation plan built around a progression of goals that would gradually earn him 1% of the outstanding shares. Musk later told one of the co-founders in an email that he was “planning something really crazy, but also high risk.”

Five day view

The shareholder accuses Musk of “unjustified enrichment” and requests the annulment of the plan, which in theory should have been extended for 10 years. The deal netted the tycoon the equivalent of $52.4 billion in stock options over four and a half years, after having achieved virtually all of the company’s goals. When the deal closed it was valued at a total of $56 billion. Judge McCormick must now decide whether Musk has to return the stock options provided in the salary package to Tesla. The hearing will last five days.

Tornetta alleges in his lawsuit that the board failed to exercise its independence from Musk, whose members, because of their relationship with him, were not sufficiently autonomous to decide, when it drew up a new salary package in 2018 for its chief executive. The shareholder complained that the board lavished the world’s largest compensation plan on a part-time leader who also ran other companies he had founded, the start ups SpaceX, Boring, a tunneling business, and Neuralink.

Last month Musk landed on the social network Twitter after acquiring it for 44,000 million dollars, a purchase from which he wanted to withdraw, engaging in a legal fight for four months that, curiously, Judge McCormick herself should have arbitrated. Since he took over on the social network, Musk has abruptly reduced the staff, changed moderation and verification policies and faced a flight of advertisers, with the consequent loss of advertising revenue, which led him to publicly raise the possibility of bankruptcy if the company’s course does not change.

Tesla executives have defended the salary agreement despite Musk’s other business interests, stressing that the purpose of the billion-dollar compensation was to encourage the magnate to contribute maximum value to the company’s development process.

Musk canceled a trip to Bali, where he was scheduled to participate in an event on the sidelines of the G-20 summit, to appear in court in Wilmington.