Amid speculation over Twitter’s future following a mega takeover by Elon Musk, a United States court is due to decide if the $56 billion pay package of the world’s richest person from Tesla is justified or not.
The decision is set to be concluded after five days of testimony including three hours from Musk, reported news agency Reuters.
Here are the top points on the $56 billion Tesla trial:
The debate is around whether Musk’s pay package is a result of Tesla’s meteoric growth or part of any funny business. The defendants – Musk and Tesla directors – have testified that the package was pronounced to deliver the 10-fold growth in Tesla’s stock price, Reuters reported. “We thought if we could pull this off, if this plan was executed, Tesla would be one of the most valuable technology companies,” Antonio Gracias, a Tesla board member until 2021, told the Delaware court on Wednesday.
A shareholder Richard Tornetta in 2018 claimed the package was dictated by Musk and was approved by the shareholders through voting, who Tornetta says were “misled” by Tesla. The directors, at the trial, argued the package was a buyout of Musk’s time to lead Tesla through a “critical phase” at a time when he could have focused on his own companies.
Musk, in his defense, said he wanted the package to fund his “dream” of Mars travel to make “life multi-planetary in order to ensure the long-term survival of consciousness.” Reuters reported that Musk also testified about his efforts to bring Tesla back from the “brink” of failure in 2017 to its current exponential growth.
The package allows Twitter CEO to hold 1 per cent of Tesla’s stock at a deep discount each time performance and financial targets are achieved, otherwise Musk will not get anything, as per Reuters. Tesla has reached 11 of 12 targets, providing Musk with over $52.4 billion in stock option gains, news agency AP reported, citing the lawsuit. Musk also sold his shares to pay for Twitter purchases which have put Tesla stocks under pressure.
Tornetta tried to show that some information was concealed from shareholders and projected directors as personal friends or business partners of Musk. His lawyers argued Tesla did not disclose that three of the targets were likely to be met within 18 months of the vote and have demanded that stocks granted under the plan to Musk, be returned to Tesla.
The decision of the months-long trial can be appealed to the Delaware Supreme Court.