The trial over Tesla’s CEO compensation plan, valued at more than $55 billion (about 53.3 billion euros), began on Monday in a court in the US state of Delaware.
The lawsuit alleges that the performance-based stock options were negotiated by the Compensation Committee and approved in 2018 by Tesla board members who had a conflict of interest due to personal and professional relationships with Musk.
The suit, which was filed nearly four years ago, alleges that the shareholder voted to approve this compensation based on an incomplete or misleading proxy statement.
The plaintiff argues that counsel in fact incorrectly described the members of the compensation committee as “independent” and described all of the goals that led to the acquisition of the stock options as “stretch” goals that must have been difficult to achieve, even though projections indicated that three could potentially be reached in Within 18 months of the shareholders vote.
During the court hearing, Musk said that while the factory’s production was struggling to increase, his time was “dedicated almost entirely to Tesla.”
The probability of survival [do grupo] It was very low, ”recalls the millionaire, who regularly told that the manufacturer was on the verge of bankruptcy in 2018.
Entry to the courthouse was secret, after he arrived in a black Tesla. In a black suit and tie, the businessman answered questions for two and a half hours.
The plaintiff’s attorney, Greg Farallo, spent a lot of cross-examination trying to get Musk to admit that he controls Tesla so much that he can influence the board of directors to carry out his arguments.
The Tesla CEO said he had no role regarding the compensation plan, did not attend meetings on the matter and had no insight into the internal process by which the company determined the highest compensation ever recorded for publicly traded companies.
The businessman added that he does not want to be the “CEO of any company” and that this title is inappropriate to describe his work at Tesla or SpaceX, the company that makes rockets and spacecraft.
Facing questions from the attorney general, Musk acknowledged that he did not consult Tesla’s board of directors when, in March 2021, he designated himself as the company’s “Technoking” in official documents filed with the United States Securities and Exchange Commission (SEC, In English)
The ruling came as a result of the lawsuit filed by Richard Tornita, a Telsa shareholder, who believes that the bonus is exaggerated and that Musk achieved it thanks to the power he has over the company and the board of directors, as he is one of its key members. contributors.
Under the plan, Musk could make billions of dollars if the electric car and solar panel maker hits certain operating and market capitalization goals.
For each instance of simultaneous realization of the market capitalization and operating objective, Musk, who already owned about 22% of Tesla when the plan was approved, would receive shares equal to 1% of the shares outstanding at the time of grant.
Musk’s interest in the company will increase to about 28% if Tesla’s market capitalization grows by $600 billion (about 581 billion euros).
Each of the plan’s goals includes expanding Tesla’s market value by $50 billion and achieving a strong revenue or pre-tax earnings growth target.
Musk will get the full benefits of the payment plan, $55.8 billion (54 billion euros), only if Tesla reaches a market capitalization of $650 billion (about 629 billion euros) and unprecedented revenues and gains in a decade.
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