Tesla director and former executive defend Musk’s compensation plan
TESLARATINov 15, 2022
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Final Arguments Scheduled in Musk's $56B Tesla Pay Plan Trial
Last updated Feb 21, 2023
Image credit: Getty Images [via Business Insider]Facts
- On Tuesday, lawyers for Tesla CEO Elon Musk and shareholder Richard Tornetta were scheduled to begin presenting their closing arguments to a Delaware judge in the trial over Musk's $56B compensation package from Tesla.
- This comes after a five-day trial last November during which Musk testified about the inception of the 2018 pay package, whether its performance goals were difficult to achieve, and whether it was precisely described to investors.
- Tornetta claims the CEO shouldn't have been able to dictate the terms of the compensation plan, which allows him to buy 1% of the company's stock at a deep discount for every milestone achieved. Tornetta is seeking to have it fully rescinded or revoked.
- Tesla hit 11 of the 12 performance and financial targets while its value briefly skyrocketed to $1T in 2021 from $50B when the package was arranged.
- The judge could come to a decision as soon as Tuesday, determining whether Musk commanded the board's approval of the compensation plan.
- She's the same judge who presided over the showdown between Musk and Twitter last year when he attempted to terminate a $44B deal to take over the social media platform. Musk eventually completed the purchase.
Spin
Narrative B
This compensation plan was granted to Musk — who took on high risk to achieve a high reward — because of his paramount role in Tesla's success. Though Tesla skeptics ridiculed his decisions at the time, Musk's management has resulted in the carmaker increasing its value from $59B to $600B and achieving almost all its stipulated performance targets.
Narrative A
This compensation plan is clearly excessive. Musk has benefited from his influence over the board's committee – which falsely claimed it had no conflicts of interest – and been rewarded for his part-time management role at Tesla, largely on the grounds of milestones that had already been achieved when shareholders voted.
Nerd narrative
There's a 50% chance that Tesla's market capitalization will be at least 1.94 trillion dollars by Jan. 1, 2030, according to the Metaculus prediction community.
