WILMINGTON, Del (Reuters) -Elon Musk testified on Wednesday that he made decisions about Tesla Inc, including pausing the acceptance of Bitcoin payments, without director approval as he defended his $56 billion pay package against claims he dictated its terms to a compliant board.
Tesla shareholder Richard Tornetta sued Musk and the board in 2018 and hopes to prove that Musk used his dominance over Tesla’s board to craft the compensation package, which did not require him to work at Tesla full-time.
Musk said he had made a unilateral call on ending acceptance of the Bitcoin cryptocurrency for environmental reasons. He also acknowledged that the board was not informed before he told analysts in October that Tesla’s board was considering buying back up to $10 billion of stock.
The five-day trial comes as Musk is struggling to oversee a chaotic overhaul of Twitter, which he was forced to buy for $44 billion in a separate legal battle before the same judge, Chancellor Kathaleen McCormick, after trying to back out of that deal.
Tornetta’s lawyer tried to portray Tesla as a company completely in the grip of Musk, the world’s richest person, who sought the record pay package with easy targets to help finance his ambitions to travel to Mars.
Musk admitted that he vacationed with board members and sometimes tweeted about the company without clearing the messages with a Tesla lawyer as required by a 2018 settlement with a securities regulator.
Musk said he would not accept a pay plan that required him to punch a clock or commit certain hours to Tesla. “I pretty much work all the time,” he said. “I don’t know what a punch clock would achieve.”
Musk, who arrived in a black Tesla and was led into the courtroom in Delaware’s Court of Chancery via a separate entrance due to safety concerns, completed his testimony on Wednesday in just under three hours.
He was followed on the stand by Antonio Gracias, a longtime friend of Musk who was also a Tesla board member from 2007 to 2021.
The billionaire testified that he focuses his attention where it is needed most, which in 2017 was Tesla.
“So in times of crisis, allocation changes to where the crisis is,” said Musk. “I was entirely focused on the execution of the company,” he said.
Musk said Tesla’s explosive growth from the brink of failure in 2017 was incredibly difficult.
“The amount of pain, no words can express,” he said in a near-whisper, describing the effort. “It’s pain I would not wish to inflict upon anyone.”
Musk has a history of combative testimony and often appears disdainful of lawyers who ask probing questions. In past trials, he has called opposing attorneys “reprehensible,” questioned their happiness and accused them of “extortion.”
Musk was more restrained in Wednesday’s proceedings, although he chafed at probing questions.
At one point, Musk told the plaintiff lawyer, “your question is a complex question that is commonly used to mislead people.”
Musk acknowledged that he was not a lawyer but added, “when you’re in enough lawsuits you pick up a few things.”
Musk tweeted this week that he was remaining at Twitter’s San Francisco headquarters around the clock until he fixed that company’s problems, and said on Wednesday he had come on an overnight flight from the social media company.
Tornetta has asked the court to rescind the 2018 package, which his attorney Greg Varallo said was $20 billion larger than the annual gross domestic product of the state of Delaware.
The legal team for Musk and the Tesla directors have cast the pay package as a set of audacious goals that worked by driving 10-fold growth in Tesla’s stock value, to more than $600 billion from around $50 billion.
They have argued the plan was developed by independent board members, advised by outside professionals and with input from large shareholders.
Tornetta’s attorney tried to show Musk was involved from the start. An email from May 2017 appeared to show Musk was pushing for the pay plan months before the board negotiated it with him.
“I’m planning something really crazy, but also high risk,” he wrote.
Tornetta’s lawyer tried to show Musk drove the schedule for the plan and baked in targets that were about to be hit, according to non-public projections.
The disputed Tesla package allows Musk to buy 1% of Tesla’s stock at a deep discount each time escalating performance and financial targets are met. Otherwise, Musk gets nothing.
Tesla has hit 11 of the 12 targets, according to court papers.
Shareholders generally cannot challenge executive compensation because courts typically defer to the judgment of directors. The Musk case survived a motion to dismiss because it was determined he might be considered a controlling shareholder, which means stricter rules apply.
Former board member Gracias described Musk as essential to the company’s success, in testimony calling him “extraordinary” and a “product genius.”
Source: Read Full Article