Tesla’s board of directors chairman testified in court Tuesday that Chief Executive Elon Musk’s dream of interplanetary travel played a role in the extraordinarily rich pay package the board awarded him in 2018.
Tesla Chair Robin Denholm testified in Delaware Chancery Court that Musk needed to pursue his goal of one day achieving interplanetary travel. But he said the board wants to make sure it pays enough attention to Tesla.
When asked for more details, she said, quite honestly, I have no idea how much it costs to do any interplanetary travel. Tesla is being sued in Delaware’s Chancery Court by stockholders who say the board was not independent of Elon Musk, but rather under his thumb when it offered a $55 billion pay incentive plan.
Board members have testified that Elon Musk exercised no control over the board’s decisions. Under the law, the board’s decision must be independent of the pay-plan recipient. Musk’s current No. 1 rank on Bloomberg’s list of the world’s richest people is based on an estimated $185 billion in personal wealth.
Denholm was also asked how much she knew about Musk’s compliance with a consent decree Elon Musk signed with the Securities and Exchange Commission in 2018.
Tesla stock jumps due to Elon Musk’s tweet; The SEC found the claim to be false and accused Musk of stock manipulation. Under the decree, Elon Musk is required to run any tweets that are material for Tesla to a designated attorney. In an earlier statement, Elon Musk said he would forward such tweets to a lawyer and await a response.
If I don’t get a reply, I will tweet. He said he did not remember ever receiving a response to his tweet permission requests, and did not remember how long he waited before posting.
The trial judge asked Denholm directly if he knew Musk was posting the tweet after waiting an unspecified amount of time. The lawsuit alleges that the performance-based stock option grant was negotiated by the compensation committee.
Tesla was approved by board members who had conflicts of interest due to personal and business relationships with Musk, including investments in the companies. It is also alleged that the shareholder vote approving the compensation plan was based on a misleading proxy statement.