As if Elon Musk didn’t have enough on his plate, he’ll be in court next week to defend his $56 billion Tesla compensation deal. Richard Tornetta, a Tesla shareholder who sued in 2019 to withdraw Musk’s 2018 pay package, alleges the package — “the greatest compensation payout in human history” — is unfairly handed to Musk without requiring him to work only on the company.
However, Twitter did not aid Musk’s cause in the lawsuit over his compensation deal. Musk is already the CEO of SpaceX, the Boring Company, OpenAI, and Neuralink, in addition to Tesla. Musk’s use of Twitter simply adds weight to Tornetta’s assertions that Musk is a “part-time executive” at Tesla.
Tesla’s remuneration package resulted in a tenfold rise in shareholder value.
Kathaleen McCormick will preside over the trial in Delaware’s Court of Chancery. McCormick managed Twitter’s lawsuit against Musk, which resulted in Musk agreeing to finalize his $44 billion transaction, which he financed in part by selling Tesla stock.
The award “defied its purpose of focusing Musk on Tesla,” according to Musk’s attorneys, who argue that Musk’s ambition is what distinguishes him as a CEO and that he does not punch a clock to gauge time spent at the firm.
The contentious pay plan permits Musk to purchase 1% of Tesla stock at a discount whenever performance and financial benchmarks are fulfilled. Musk receives nothing if they are not met. According to court documents, Tesla met 11 of 12 criteria.
“In any case,” Musk’s attorneys claimed, “under the proposed plan, Musk would not earn any remuneration at Tesla unless he achieved substantial growth, which could not be accomplished without significant time and attention from the CEO.”
The lawsuit also contends that the package was not completely fair since Musk controls the board.
“None of the committee members were independent of Musk,” Tornetta’s attorneys stated.