© Reuters. FILE PHOTO: Tesla vehicles are pictured at a Tesla service center in San Diego, California, U.S., January 13, 2023. REUTERS/Mike Blake
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by Tom Hals
WILMINGTON, Del (Reuters) – Lawyers for Elon Musk and a Tesla (NASDAQ:) Inc investor will make closing arguments on Tuesday in a trial over his $56 billion payout package and whether it boosted the automaker’s growth electrical or improperly subsidized Musk’s dream of owning one. day traveling to Mars.
The arguments follow a five-day trial in November that featured testimony from Tesla’s chief executive about the origins of the 2018 pay package and whether its performance targets were difficult to achieve and were accurately described to investors.
Richard Tornetta, a small Tesla investor, sued Musk and the board in 2018 and hopes to prove that Musk forced compliant directors to provide a package of his design, which is many times the combined salary of the next 200 CEOs. best paid. He contributes to Musk’s fortune, the second largest in the world.
The package allows Musk to buy 1% of Tesla’s stock at a deep discount each time increasing financial and performance targets are met; otherwise Musk gets nothing.
Tesla hit 11 of 12 targets as its value soared to briefly surpass $1 trillion in 2021 from $50 billion when the package was negotiated.
Tornetta’s lawyers argued that Tesla’s board had a duty to offer a smaller pay package or find another CEO and that they should have required Musk to work full-time at Tesla instead of allowing him to focus on other projects, such as running Twitter. .
Tornetta wants part or all of the package rescinded.
Musk, who founded the rocket company SpaceX, admitted during his testimony that his pay package provided funds that he would use to finance interplanetary travel.
“It’s a way to get humanity to Mars,” he testified. “So Tesla can help achieve that.”
His lawyers also argued that the payment plan benefited shareholders by increasing the value of their shares 10 times.
Chancellor Kathaleen McCormick (NYSE:) of the Delaware Court of Chancery must determine whether Musk, who owned 22% of Tesla’s shares in 2018, controlled the company through ties to the board and his personality, which will determine the outcome of the case.
