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As if Elon Musk didn\u2019t have enough on his plate, the world\u2019s richest man is headed to court next week to defend his $56 billion Tesla pay package. Richard Tornetta, a Tesla shareholder who filed suit in 2019 to rescind Musk\u2019s 2018 pay deal, claims the package \u2014 \u201cthe largest compensation grant in human history\u201d \u2014 is unjustly paid to Musk without demanding he focus entirely on the carmaker.<\/p>\n
The trial begins November 14, yet another drama Musk will have to juggle as he works to overhaul Twitter. Musk\u2019s deal to buy the social media company went through<\/a> at the end of October, and since then Musk has set to work laying off<\/a> swathes of employees, getting sued<\/a> for said layoffs and generally scheming out loud on the platform about charging users $8 per month<\/a> to get a blue tick next to their names.<\/p>\n The Twitter buy didn\u2019t exactly help Musk\u2019s case in the lawsuit over his pay package. Aside from Tesla, Musk already serves as CEO of SpaceX, the Boring Company, OpenAI and Neuralink. With Twitter, Musk will only lend credence to Tornetta\u2019s claims that Musk is a \u201cpart-time executive\u201d at Tesla.<\/p>\n Tornetta also claims the board set low bars on performance targets for Musk and that the grant was \u201cdemanded for the avowed purpose of colonizing Mars (the planet).\u201d<\/p>\n Tesla has said Musk\u2019s pay package delivered a tenfold increase in value to shareholders.<\/p>\n The trial will be decided by Kathaleen McCormick on Delaware\u2019s Court of Chancery. McCormick oversaw Twitter\u2019s suit against Musk<\/a> that ended in him agreeing to close his $44 billion deal, an acquisition which he financed in large part by selling his Tesla stock<\/a>.<\/p>\n Tornetta\u2019s lawyers argue the 2018 package did not achieve its stated purpose of getting Musk to focus on Tesla, and no wonder \u2014 there were no provisions requiring Musk to devote time or attention to Tesla nor were there provisions limiting Musk\u2019s allocation of time or attention to non-Tesla endeavors.<\/p>\n \u201cIndeed, Musk testified that since the Grant\u2019s approval, he has spent a little more than half his time on Tesla matters and has dedicated substantial time and attention to various other endeavors,\u201d the lawsuit reads.<\/p>\n Musk\u2019s lawyers responded that his ambition is what makes him unique as a CEO and that he does not punch a clock to determine time spent at the company.<\/p>\n The disputed pay package allows Musk to buy 1% of Tesla stock at a discount each time performance and financial targets are met. If they aren\u2019t met, Musk gets nothing. Tesla hit 11 out of 12 targets, according to court papers.<\/p>\n \u201cIn any event, under the proposed plan, Musk would not earn any compensation at Tesla unless he drove tremendous growth, which could not be accomplished without significant time and attention from the CEO,\u201d said Musk\u2019s lawyers.<\/p>\n The suit against Musk also claims the package was not entirely fair because Musk controls the board.<\/p>\n \u201cNone of the committee members were independent of Musk,\u201d wrote Tornetta\u2019s lawyers.<\/p>\n For example, Kimbal Musk, Musk\u2019s brother, sits on Tesla\u2019s board \u2014 a pretty clear conflict of interest. Tornetta\u2019s filing also points to former board member Antonio Gracias who the plaintiff describes as a close friend of Musk\u2019s. Gracias, personally and through his private equity firm, has collectively invested over half a billion dollars in \u201cessentially all of Musk\u2019s entities,\u201d according to the filing, including PayPal, Tesla, SpaceX, SolarCity, The Boring Company and Neuralink.<\/p>\n In addition, the filing calls out Ira Ehrenpreis and James Murdoch, who are both still on Tesla\u2019s board, as being personal friends of Musk and investors in Musk\u2019s entities. Gracias, Murdoch and Ehrenpreis are also listed among the defendants on the case.<\/p>\n<\/p><\/div>\nThe grant \u201cdefied its goal of focusing Musk on Tesla\u201d<\/h2>\n