Elon Musk, CEO of Tesla, stands at the Tesla Gigafactory foundry during a press conference.
Patrick Pleul photo union Getty Images
Tesla and Elon Musk are facing a test for the 2018 CEO’s salary package, which is worth about $ 2.5 billion at the time of its provision.
Shareholder Richard J. Torneta is suing Musk and the Tesla board after the package was cleared. He claimed that the lawsuit was excessive and said that the permission from the board of directors of the electric car company was a violation of its trust obligation.
The 2018 Musk CEO Performance Award consisted of 101.3 million share options (adjusted for a 5-to-1 split in 2020) in 12 tranches based on milestones. The plan says Musk will only be paid if he reaches those stages that focus on market value and Tesla’s operations. Otherwise, the CEO will not receive anything.
Tesla’s shares jumped sharply, and Musk’s payouts began in 2020, which helped him become the richest man in the world.
Tornetta is seeking to cancel the release of options from the 2018 plan, which has brought Musk shares worth tens of billions of dollars in current value.
The shareholder said Tesla’s board members had unresolved conflicts and said Musk had drawn up his own payment plan with the personal help of his former divorce lawyer, Todd Maron, who was also Tesla’s chief adviser. Tornetta claims that the Tesla board did not disclose all the information it must have to shareholders before voting on a proxy to approve the payment plan.
Maron left the company at the end of 2018, and Tesla has not had a general advisor since December 2019.
Musk’s lawyers asked the court for a summary judgment and asked for the case to be dismissed. But in a letter dated February 24, Court Chancellor Kathleen St. J. McCormick writes: “I am skeptical that this lawsuit can be resolved on the basis of indisputable facts. So I cancel the oral dispute on the requests for an abbreviated decision.” She added: “This case will be tried.”
The trial is scheduled for April 18 at the Delaware Office of Justice, according to documents first published in the PlainSite legal transparency database. This date is subject to change. PlainSite is owned by Aaron Greenspan, who previously revealed a short position at Tesla.
Tesla did not respond to a request for comment, and Tornetta’s lawyers declined to comment when they contacted CNBC.
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