Elon Musk is going to court this week to defend his multi-billion dollar pay package at Tesla Inc. TSLA 2.75% increase; green upward pointing triangle
A Tesla shareholder is asking a Delaware business-law court to scrap Musk’s CEO pay package, which was approved in 2018 and is worth about $52 billion at recent share prices.
The plaintiffs allege that Tesla’s board at the time failed to disclose important information about the deal and how it came together. Lawyers representing current and former Tesla board members have said the package was successful and approved through a fair process.
They point to the performance of the company, which is now the world’s most valuable car company with a market capitalization of about $620 billion. When shareholders approved Mr. Musk’s latest wage deal, the company was valued at less than $60 billion.
The case is set for a five-day nonjudicial trial beginning Monday in Wilmington, Del. It will be heard by Chancellor Kathleen McCormick, who presided over Twitter Inc’s lawsuit seeking to force Mr Musk to pay his $44 billion.
The transaction closed at the end of last month, before the start of hearings on a deal for the social media company. This week’s test comes at a busy time for Mr Musk, who is stepping down from Twitter, laying off nearly 50% of his workforce and making other changes.
He also runs the rocket company SpaceX. Tesla’s chief executive is expected to take a stand Wednesday in a lawsuit that does not include an opening or closing statement and where a decision is typically delivered by a judge months after a trial ends.
There are also several current and former Tesla board members to testify. Mr Musk has taken the stand several times in recent years. In 2021, he joined the domestic-solar company SolarCity Corp. in 2016. got included in. joined in. K was also before a Delaware court defending the approximately $2.1 billion acquisition of Tesla.
A Delaware judge found in Mr. Musk’s favor. The judge said the board’s review of the SolarCity deal was worthwhile, although the process was incomplete and involved Mr. Musk. That decision is being appealed. In 2019, Mr Musk was defending himself in court in a defamation case.
A central question in the latest case is whether Mr Musk moderated the board’s approach on his salary package. At the time, Mr. Musk owned about 22% of Tesla and had close ties with several directors.
The plaintiffs alleged that Mr. Musk controlled the board, that the board misled shareholders into obtaining their approval for the stock grant, and that the deal was unnecessary to induce them.