Shulou(Shulou.com)11/24 Report--

On November 8, Elon Musk (Elon Musk) will appear in court on November 14 to defend whether he should receive Tesla's huge salary of $56 billion, refuting shareholder allegations that he can earn unfair income without having to work full-time.

Richard Richard Tornetta, Tesla's shareholder, is seeking to scrap the company's 2018 pay agreement with Mr Musk, saying the board set performance targets that could be easily met and that Mr Musk finalised the pay plan to fund his dream of colonizing Mars. Tesla retorted that the compensation package had brought a tenfold increase in value to shareholders.

The case is scheduled for trial on November 14 and will be decided by Justice Catherine McCormick (Kathaleen McCormick) of the Delaware Court of Chancery. Previously, she was also the presiding judge in Twitter v. Musk's acquisition default, but the lawsuit ended in October. At the time, Musk agreed to buy Twitter for $44 billion before the deadline, mainly financed by his stake in Tesla.

"if Musk doesn't get Tesla's salary, I think we will see a lot of unpredictable things, such as the way Tesla operates and the fees he pays to buy Twitter," said Ann Lipton, a professor at Tulane University's law school. However, Lipton and other legal experts say Tonita's lawsuit will be much more difficult than Twitter's lawsuit against Musk.

In addition to managing Tesla, Musk founded and served as chief executive of SpaceX, one of the most highly valued private companies in the world, as well as brain-computer interface company Neuralink, tunnel mining company The Boring Co and artificial intelligence (AI) research laboratory OpenAI. Last week, he appointed himself chief executive of Twitter.

A lawyer at Tonita, CEO of multiple companies, argued that the 2018 pay package failed to achieve his stated goal of keeping Mr Musk focused on Tesla. They described Musk as a "part-time CEO" who split his time in two as early as 2018. Work in Tesla on Tuesday, Wednesday and Friday, and go to rocket company SpaceX on Monday and Thursday.

According to the lawsuit, Robyn Denholm, Tesla's chairman, emailed Gabriel Toledano, then chief human resources officer of Tesla, in 2018, saying that Mr Musk's time with Tesla was "getting shorter and shorter, which is becoming more and more problematic".

However, Tesla believes that the compensation package does not require Musk to go to the company every day or stay at the company for a specific time, but to achieve a "bold goal" to make Musk himself rich. it also helps shareholders like Tonita get rich.

The controversial pay package allows Mr Musk to buy 1 per cent of Tesla's shares at a steep discount every time he meets his performance and financial targets. Otherwise, Musk will get nothing. Tesla's market capitalization soared from $50 billion to $650 billion, meeting 11 of 12 targets, driven by an increase in production of the Model 3, according to court documents.

Amit Batish, an analyst at Equilar, an executive compensation research firm, says Mr Musk's compensation package, with an initial value of about $50 billion, has so far brought him a fortune of $200 billion. The stock award is more than six times higher than the combined pay of the 200 highest-paid chief executives last year.

The 14-day trial is likely to focus on Tonita's allegations that the plan was developed and approved by directors who benefited from Mr Musk and was marketed to other shareholders in the absence of transparency.

Tight control of the board of directors in the litigation documents, Tonita cited many examples of Musk's firm control of the board. For example, Antonio Gracias, described by the plaintiffs as Mr Musk's close friend and chief independent director from 2010 to 2019, testified in 2021 that he could sell Tesla if Mr Musk wanted to, and the board could not stop him.

Minor Myers, a professor at the University of Connecticut Law School, said: "who is working for whom? does Musk work for the board, or does the board escort Musk?" Myers also said that if Musk's compensation package is cancelled, Tesla's board may simply create a new one and do so under the guidance of Judge McCormick's decision.

However, the situation has changed, making the process more complicated. "what will all parties think of Musk now that he has Twitter? it will be a huge challenge to determine how to keep Musk from being distracted by other projects," Myers said. Miles also raised a question: how much does Tesla's board need to spend to get Musk to pay full attention?

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