Judge to Decide Whether Tesla’s $56 Billion Musk Pay Package Justifies Company Growth – National | globalnews.ca

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After five days of testimony, including three hours from Elon Musk, a Delaware judge will now decide whether Musk’s $56 billion payout package from Tesla Inc was justified by the company’s explosive growth or undermined by flawed process. .

Musk and the Tesla TSLA.O directors named as defendants repeatedly testified that the package did what it set out to do: increase the company’s stock price 10-fold, enriching investors and Musk.

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“We thought if we could get this done, if this plan was executed, Tesla would be one of the most valuable technology companies,” Antonio Gracias, a Tesla board member from 2007 to 2021, told the Delaware Court of Chancery on Wednesday. “It was a great deal for shareholders.”

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The trial seeks to resolve claims by shareholder Richard Tornetta that the 2018 pay package was dictated by Musk, the world’s richest person, to subordinate directors and approved by a vote of shareholders who were misled by Tesla.

The trial wrapped up on Friday as Musk struggles to oversee a chaotic reorganization of Twitter Inc, which he was forced to buy for $44 billion in a separate legal battle before the same judge, Chancellor Kathaleen McCormick.

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“My feeling is that even though it went all the way to trial, a ruling will favor Mr. Musk,” said Eric Talley, a Columbia Law School professor who has followed the case.

It will be months before McCormick rules and his decision can be appealed to the Delaware Supreme Court.

During the week-long trial, the directors said the pay package was meant to ensure Musk guided the EV maker through a critical phase where it could have focused on his rocket company SpaceX or the tunnels The Boring Co.

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Musk told the board that he wanted a huge package to fund his dream of traveling to Mars, or, as he testified, doing “multiplanetary living to ensure the long-term survival of consciousness.”

Musk outlined his efforts to take the company from the brink of failure in 2017 to exponential growth. “The amount of pain that no words can express,” Musk testified Wednesday.

Gracias recalled that Musk celebrated his birthday in a factory conference room with a supermarket cake. “This was all hands on deck, 24/7, brutal,” he told the court.

The package allows Musk to buy 1% of Tesla’s stock at a deep discount each time increasing financial and performance targets are met. Otherwise, Musk gets nothing.

Tesla has hit 11 of the 12 targets as its value briefly skyrocketed to more than $1 trillion from $50 billion.

Tornetta wants the plan terminated and the shares granted under the plan returned to Tesla.

Much of the lawsuit centered on information provided to shareholders before they approved the plan. Tornetta’s lawyers tried to show that Tesla concealed that three objectives of the package were likely to be met quickly.

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The plaintiff portrayed the directors as personal friends or business associates of Musk, who was the link to his wealth.

The directors tried to show that they could resist Musk’s demands. But the evidence of grant extraction was limited to the best method of accounting for stock grants and the requirement that Musk hold his stock for five years.

“It wasn’t a knock-down and drag affair,” Todd Maron testified of salary talks in 2017 when he was general counsel.

Talley said Musk is a unique CEO and his salary reflects that.

“He’s like a Labrador retriever. He sees a ball and runs after it. You could almost argue that she wasn’t paid enough because she ran after Twitter.”

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Daniel Wallis)

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