Elon Musk plans to testify this Wednesday for the complaint of a minority shareholder against the package of 56,000 million dollars in Tesla securities to which he chooses to meet objectives.
The whistleblower, Richard Tornetta, also includes the board of directors in the lawsuit, which he accuses of caving in to pressure from Musk to achieve the package. The setting will be a court in Delaware, USA.
The controversy dates back to 2018, when the board of directors authorized "the largest compensation plan ever granted to an executive." With it, Musk aspired to pocket up to 56,000 million for goals within a decade. They are granted for improvements in the business or in the stock price -which was multiplied by ten after its implementation-.
To date, all the goals for improving market capitalization and 11 of the 12 in the productive facet have been met. The plan allows you to buy 1% of the company's capital stock at a price well below the market price (stock options). With them he has already received 52,400 million in shares in four and a half years.
Elon Musk does not have a fixed salary, bonus or shares in Tesla, but the complainant affirms that he did not need those incentives to achieve the objectives, because he has never threatened to leave the company. The council, because of its relationship with Musk or personal interests, was not independent enough to oppose it, it is claimed. With this money he would also have sought to finance his goal of reaching Mars, he adds.
According to local media, Tornetta asks to cancel the plan. He argues that for such large compensation to be consistent, Musk should be required to work full-time for Tesla. Something that he does not do: he is also in charge of SpaceX -of space technology-, The Boring Co. -tunnels for underground transport- and now he adds the social network Twitter, after acquiring it for 40,000 million. Precisely the judge in charge of the case is Kathaleen McCormick, who also dealt with the file that confronts Elon Musk and Twitter. She is expected to make a decision in a few months.
The first summoned to testify, on Monday, was Ira Ehrenpreis, independent director of Tesla and president of the remuneration and appointments commissions. According to Reuters, he argued at trial that the purpose of Musk's compensation was to meet goals that were "extraordinarily ambitious and difficult," rather than to spend any time working for the company.
It's "very rare" for executive pay claims to go to trial, since judges often decide or throw them out and generally view them as strategic decisions, says Jill Fisch, a professor of business law at the University of Pennsylvania, to AFP.
But in this case, the court ruled that the fact that Musk owns about 22% of Tesla's shares and is its CEO "could have an undue impact" on the board of directors and other shareholders.
