(Wilmington) Elon Musk began his testimony on Wednesday in the Delaware court where he is called in a lawsuit attacking the compensation plan to more than 50 billion dollars granted to him by the board of directors of Tesla.
His entrance was made discreetly: a black Tesla parked at the back of the enclosure, directly in a tent set up for the occasion.
A few minutes later, in a black suit and tie, he quietly passed the security installed at the door of the courtroom.
He testifies before the Delaware court where the trial against the social network must take place before he decides to honor his commitment and pay 44 billion dollars to buy Twitter at the end of October.
The case for which he is called on Wednesday follows the complaint of a shareholder of the electric car manufacturer, which is suing Tesla, its boss and certain members of its board of directors for having authorized in 2018 “the biggest plan of compensation ever awarded to an executive”.
The latter plans to pay Elon Musk Tesla shares based on the achievement of several objectives over ten years, a plan then estimated at 56 billion dollars.
After fulfilling virtually all of them, the leader pocketed $52.4 billion in stock options in four and a half years, according to a court document from plaintiff Richard Tornetta.
Enough to fuel his fortune and help him rise to the rank of the richest man in the world.
According to the complainant, Elon Musk did not need these financial incentives to achieve these objectives.
But he dictated his terms to directors who, given their relationship with the iconic entrepreneur or their personal interests, were not independent enough to oppose it. And this when he did not even work full time for Tesla insofar as he is also at the head of the space company SpaceX and the start-ups Neuralink and The Boring Company.
Richard Tornetta requests the cancellation of the plan.
Lawyers representing the defendants argue that Elon Musk’s compensation plan is linked to the performance of the company, including on the stock market, and that it worked perfectly as the value of Tesla increased by more than ten since its adoption.
“Very unusual”
The trial, without a jury, began Monday with the testimony of Ira Ehrenpreis, head of compensation on the board of directors of Tesla, followed among others on Tuesday by that of the current president of this body, Robyn Denholm.
The judge in charge of the case is Kathaleen McCormick, who also took care of the file opposing Elon Musk to Twitter. She will make her decision later, in a few weeks or a few months.
It’s ‘highly unusual’ for executive compensation claims to make it to trial as they are often settled or dismissed by judges who generally view them as strategic decisions, notes Jill Fisch , professor of business law at the University of Pennsylvania.
But in this case, the court decided that the fact that Elon Musk owns about 22% of the shares of Tesla and is its chief executive “could have an undue impact” on the board of directors and on other shareholders, she indicates.
The lawsuit comes at a time when Elon Musk has been under severe pressure since his acquisition of Twitter in late October, between the departure of more than half of the employees, the flight of advertisers, warnings from various authorities and the confused launch of new products.
During an intervention on Monday, he admitted, in a joking tone, that his workload had “recently increased a lot”.