Elon Musk defends $56bn pay in Tesla trial evidence

World's richest man also says he's spending a lot of time with Twitter after purchase

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Elon Musk gave evidence on Wednesday that he was completely focused on Tesla in 2017 when the electric car maker was in “crisis”, rebutting claims that his $56 billion pay package was based on easy performance targets and approved by a compliant board of directors.

Tesla shareholder Richard Tornetta sued Mr Musk and the board in 2018 in hopes of proving that the company's chief executive used his dominance over the board to dictate terms of the package, which did not require him to work full-time.

Mr Musk, the world's richest person, in a Delaware courtroom described how the car maker was struggling to survive in 2017, when the pay package was developed.

“I was entirely focused on the execution of the company,” Mr Musk said when he was questioned about Tesla by his lawyer Evan Chesler. He added that he did not dictate the terms of the pay plan.

He said he would not accept a pay plan that required him to punch a clock or commit certain hours to Tesla.

“I pretty much work all the time,” he said. “I don’t know what a punch clock would achieve.”

The five-day trial before Chancellor Kathaleen McCormick comes as Mr Musk is struggling to oversee a chaotic overhaul of Twitter, the social media platform he was forced to buy for $44 billion in a separate legal battle before the same judge after trying to back out of the deal.

Mr Musk, who arrived in a black Tesla and was led into the courtroom via a separate entrance due to safety concerns, completed giving his evidence on Wednesday in a little less than three hours.

The billionaire said that he focuses his attention where it is needed most, which in 2017 was Tesla.

“So in times of crisis, allocation changes to where the crisis is,” said Mr Musk.

He has a history of combative testimony and often appears disdainful of lawyers who ask probing questions. In past trials, he has called opposing lawyers “reprehensible”, questioned their happiness and accused them of “extortion”.

Mr Musk was more restrained in Wednesday's proceedings, although he chafed at probing questions.

At one point, Mr Musk told the plaintiff lawyer: “Your question is a complex question that is commonly used to mislead people.”

He acknowledged that he was not a lawyer but added “when you're in enough lawsuits, you pick up a few things.”

Mr Musk tweeted this week that he was remaining at Twitter's San Francisco headquarters around the clock until he fixed that company's problems, and said on Wednesday he had come on an overnight flight from the social media company.

Mr Tornetta has asked the court to rescind the 2018 package, which his lawyer Greg Varallo said was $20 billion larger than the annual gross domestic product of the state of Delaware.

The legal team for Mr Musk and the Tesla directors have cast the pay package as a set of audacious goals that worked by driving 10-fold growth in Tesla's stock value, to more than $600 billion from about $50 billion.

They have argued the plan was developed by independent board members, advised by outside professionals and with input from large shareholders.

Shareholders generally cannot challenge executive compensation because courts typically defer to the judgment of directors. The case survived a motion to dismiss because it was determined he might be considered a controlling shareholder, which means stricter rules apply.

Updated: November 16, 2022, 6:23 PM
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