This afternoon marks the conclusion of the trial for the Tesla shareholder lawsuit looking into CEO Elon Musk’s extraordinary compensation package. Although the judge could rule from the bench, it might take weeks or months before a decision is made.
Musk received a compensation package from Tesla in 2018 that helped him become the richest man on the planet. Since shareholders approved the plan, Tesla’s valuation has risen more than 1,000%, bringing the net worth of the pay package to $50.9 billion today.
In June 2018, the lawsuit’s original plaintiff, Richard Tornetta, alleged that Tesla CEO Elon Musk had used his influence over the company’s board of directors to get remuneration for “funding his personal dream to inhabit Mars.” This week, arguments in the Wilmington case were heard by the Delaware Court of Chancery. According to Tornetta’s attorneys, Musk and the board were in breach of their financial obligations to shareholders. Tesla claims that in addition to supervising management, which includes Musk, the board of directors also has a legal duty to protect the funds of the company’s owners.
Tornetta contended that since Musk already owned the largest interest in Tesla, a sizable pay package wasn’t necessary to motivate him.
A who’s who of Tesla insiders, including Musk, board chair Robyn Denholm, former CFO Deepak Ahuja, former board member Antonio Gracias, and board members Ira Ehrenpreis and James Murdoch, gave testimony this week.
Paul A. Gompers, a finance expert witness and professor at the Harvard Business School, began giving his testimony on Friday. The defendants had three hours and 47 minutes left to present their case as of Friday, while the plaintiffs had two hours and 13 minutes left.
The friendships between Musk and many of his board members who drafted the agreement have been emphasized by Tornetta’s attorneys. According to Kimbal’s deposition, which was played in court this week, some have vacationed together in places like magician David Copperfield’s private island in the Bahamas, where Musk summoned his brother Kimbal and Gracias in 2017 to decide whether James Murdoch should join Tesla’s board of directors. Murdoch, who identified himself as Musk’s buddy since 2006, spent some time with them on Copperfield’s Island and soon after joined the board.
