The Twitter deal could strengthen the lawsuit over Musk’s $ 56 billion Tesla salary

Elon Musk’s Twitter $ 44 billion takeover is helping to deliver ammunition for an upcoming trial where an investor will argue that the CEO’s $ 56 billion salary package from Tesla Inc. was a waste of money that failed to secure his full-time services.

According to one of the shareholder’s attorneys, the Twitter Inc. deal and the possibility of misleading Musk from Tesla will play a key role in the October trial.

The lawsuit alleges that Musk created a 10-year package and rubber-stamped the Tesla board in 2018 without requiring the celebrity CEO to dedicate himself to the electric vehicle maker.

“Most CEOs look at contracts. The first line says, ‘You’re going to be a full-time CEO and dedicate a considerable amount of time to the company’s business and affairs.’ It’s standard, “said Greg Varalo of Bernstein Litovitz Berger & Grossman, a firm leading the charge against the wage agreement.

Mask and Tesla did not respond to requests for comment. In court papers, the defendants said the plan was properly crafted by independent directors, approved by stockholders and created unprecedented profits for investors.

Tesla stock fell more than 20% since Musk announced on April 4 that it had a 9% stake in Twitter, partly out of concern that it was distracted by the electric car maker’s supply chain problem.

In addition to Twitter, the multitasking entrepreneur is already chairman of the rocket company SpaceX, founder of the tunneling enterprise The Boring Company and owner of brain-chip startup Neuralink. His stated ambition is to colonize Mars.

The 2018 Tesla Pay Package approves stock options as the company meets growing financial targets, which the company said would encourage its continued leadership. If Tesla meets all of the goals, which are described as “expanded” goals, the value of the plan will be at least $ 56 billion, although the value of the plan increases as Tesla’s stock grows.

At present, the stock of masks under planning is worth about $ 75 billion, according to Amit Batish of research firm Equilibrium. He estimates that this is approximately 35 times the combined value of 100 top CEO pay packages by 2021.

The lawsuit, filed by shareholder Richard Tornett in the Delaware Court of Chancery, alleges that the package was unnecessary, since Musk owned 22% of Tesla at the time, giving him strong incentives to make the company a success.

Tornetta wants to cancel the plan with already approved stock options

Mask is using his Tesla stock as collateral for a loan to buy Twitter.

Mask and Tesla directors argued in court filing that the pay package did what it set out to do – aligning Musk’s incentives with shareholders and creating value.

“Since its inception, Tesla’s value has grown 1,800% from about $ 53 billion to over $ 1 trillion,” the filing said. They noted that despite the huge increase in price, the mask did not reach all the milestones.

In March 2018, shareholders approved the package, which was called “challenging” in the securities filing.

The lawsuit states that before the vote, shareholders should have been informed that management knew there was a possibility of achieving some milestones, which was described as a materially confusing exclusion.

Tesla countered in court papers that internal assumptions were intended to be “expanded.”

Deepak Ahuja, Tesla’s former chief financial officer, testified in a court case that “nothing that Elon touches or does is bold and overly explicit and aggressive.”

Despite the varied size of the paycheck, the trial is likely to turn the directors’ minds into discussing the package and what the board said to shareholders before the vote.

“No one could have looked at the crystal ball and seen the situation on Twitter,” said Minor Myers, a professor at the University of Connecticut School of Law. “But they could have discussed the Tesla mask for a while.”

The trial is set to begin on October 24 in Wilmington, Delaware and last for five days.

(Reporting by Tom Hulls in Wilmington, Delaware; Editing by Nolin Walder and Lisa Schumacher)

Related videos:

Leave a Reply

Your email address will not be published.