Tesla Chief Executive Elon Musk’s record-breaking pay package, estimated at $55 billion (€53 billion), is being contested in a United States court.
Tesla shareholder, Richard Tornetta, wants the court to rescind the deal that was negotiated by a compensation committee and approved in 2018 by Tesla board members.
Tornetta’s lawsuit alleged Musk dictated the pay package’s terms to a board of directors who had conflicts of interest due to personal and professional ties to the billionaire.
It also claimed shareholders were misled about the difficulty of certain targets Musk had to reach.
Ira Ehrenpreis, a Tesla board member since 2007, told the court in Wilmington, Delaware, on Monday that the package was designed to keep the world’s richest man engaged at Tesla.
“I wanted to make sure that Elon remained as the leader of Tesla over a longer period of time,” Ehrenpreis, who was the chair of the committee that oversaw the pay package, testified.
As Tesla’s fortunes soared so did Musk’s
The disputed pay package, the largest in US corporate history, allowed Musk to buy 1% of Tesla’s stock at a deep discount each time escalating performance and financial targets were met, otherwise Musk got nothing.
Ehrenpreis described the milestones in the plans as “extraordinarily ambitious and difficult.”
Tesla has hit 11 of the 12 targets as its value ballooned briefly to more than $1 trillion from $50 billion, according to court papers.
Ehrenpreis testified that much of Tesla’s success has been the result of Musk’s leadership, which he said combined bold vision with “a maniacal focus on execution.”
“He has both a bold vision, but he has been as hard-working a CEO as there can be,” Ehrenpreis said.
He also said his friendship with Musk played no role in his vote to approve the plan.
Musk’s Twitter involvement affects Tesla’s case
The trial is being overseen by Judge Kathaleen McCormick who oversaw the lawsuit between Musk and Twitter.
That ended when Musk bought the social media giant for $44 billion last month.
Tesla’s shareholders have raised concerns that Musk is distracted by Twitter, which he has warned might not survive an economic downturn.
The lawsuit argues that the pay package should have required Musk to work full-time at Tesla.
On Wednesday, Musk told a business forum at a G20 meeting that his “workload has recently increased quite a lot” since the Twitter deal.
“I mean, oh, man. I have too much work on my plate, that is for sure,” Musk said.
He said he was working “from morning til night, seven days a week” when asked about his acquisition of Twitter and leadership of Tesla.
Musk was due to appear in court on Wednesday to defend his Tesla pay package.
The trial was set down for five days but the outcome of the case may not be known for months.
lo/fb (AP, Reuters)