Testimony is under way in a shareholder lawsuit challenging approval by Tesla’s board of directors of a compensation plan potentially worth more than $55 billion for CEO Elon Musk.
Elon Musk arrives at Baron Investment Conference at the Metropolitan Opera House, Nov. 4, 2022, in New York. Attorneys packed a Delaware courtroom Monday, Nov. 14, 2022 as testimony began in a shareholder lawsuit challenging approval by Teslas board of directors of a compensation plan potentially worth more than $55 billion for CEO Elon Musk.
“Any action by stockholders based on a materially misleading proxy is a nullity and the grant fails,” according to a brief by the plaintiff's attorneys. Under the plan, Musk stood to reap billions if the electric car and solar panel maker hit certain market capitalization and operational milestones. For each of incidence of simultaneously meeting a market cap milestone and an operational milestone, Musk, who already owned about 22% of Tesla when the plan was approved, would get stock equal to 1% of outstanding shares at the time of the grant.
Shares of Tesla Inc. have been battered this year, like all automakers, due to a mix of backed-up supply chains and soaring inflation. Tesla shares have fallen 46% this year, while shares of Ford and GM have fallen around 31%. Ehrenpreis also testified that his friendship with Musk played no role in his vote to approve the plan.
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