Tesla shareholders approved the package in 2018, giving Musk an incentive to hit specific milestones, including a market valuation of $650 billion, which was more than 10 times the valuation at the time. The trial revolved around a specific question: Did Musk mislead shareholders when he gave them the plan?
Greg Varallo, a lawyer for suing investor Richard Tornetta, said investors were not told that Musk himself had devised the plan, nor that the board members were beholden to Musk. Last February, Judge Kathaleen McCormick He called this argument a “kill shot.”
“Defendants failed to demonstrate that the shareholder vote was fully informed because the proxy statement incorrectly described key directors as independent and misleadingly omitted details about the process,” McCormick wrote in his decision. “The defendants demonstrated that Musk was motivated solely by ambitious goals and that Tesla desperately needed Musk to succeed in its next stage of development, but these facts do not justify the largest compensation plan in the history of the public markets.”
