A lawsuit over Elon Musk’s awarding of a compensation plan granting him more than $50 billion worth of Tesla stock based on performance criteria began Monday in a Delaware court.
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A shareholder of the electric car manufacturer, Richard Tornetta, filed a complaint in 2018 claiming that the contractor and the company’s board of directors had not respected their obligations when they authorized this program.
According to him, Elon Musk dictated his terms and the directors, given their relationship with the contractor, were not independent enough to oppose it.
Also accusing Elon Musk of “unjustified enrichment”, Richard Tornetta asks for the cancellation of this plan supposed to be spread over ten years.
According to a document from his lawyers dated early November, the plan netted the Tesla boss, and the world’s richest man, the equivalent of $52.4 billion in stock options in four and a half years after almost all the objectives have been achieved. This plan was valued at a total of $56 billion when it was adopted.
The trial, without a jury, is to last five days under the presidency of Kathaleen McCormick, the magistrate who led the procedure opposing Elon Musk to Twitter. The entrepreneur having finally agreed to buy the social network for 44 billion dollars, as he had promised, the trial related to this case did not take place.
In the case of his remuneration, Elon Musk is supposed to testify on Wednesday morning. Expected at an event scheduled on the sidelines of the G20 summit in Indonesia, the billionaire warned the organizers that he could not come in person because of this legal obligation.
During a videoconference intervention, the new boss of Twitter joked that his “workload (had) recently increased a lot” since his acquisition of Twitter. Elon Musk is also the head of space company SpaceX, and start-ups Neuralink and The Boring Company.
On Monday, the proceedings began with the testimony of Ira Ehrenpreis, head of the compensation committee on Tesla’s board of directors.
He is being prosecuted alongside Elon Musk, but also with the current chairman of the board of directors of Tesla, Robin Denholm, as well as the current and former members of this body, James Murdoch, Linda Johnson Rice and Brad Buss.
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.