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Tesla board chairman testifies in Musk’s compensation lawsuit


Robyn Denholm (Beautiful Images)

WILMINGTON, Del. The head of Tesla’s board testified Tuesday in a shareholder lawsuit challenging a 2018 compensation plan for CEO Elon Musk potentially worth more than $55 billion that she cares little about. More concerned with how much time Musk will commit to the company than the results he can deliver.

“We don’t talk about time,” said Robyn Denholm when asked about her discussion with Musk about the compensation plan, this does not include any requirement for how long he will devote to the company, as opposed to his other business ventures.

“He’s focused on getting results, not on any amount of time he needs to put in,” says Denholm. She added that she doesn’t know how many hours Musk – who last month took over Twitter after paying $44 billion for the social media platform – devoted to Tesla.

“I don’t care about time,” added Denholm, who served as a member of the compensation committee at tram and the solar panel manufacturer developed the plan. “I know there were times when he slept on the factory floor.”

The lawsuit alleges that the performance-based stock option grant was negotiated by the compensation committee and approved by Tesla board members who had a conflict of interest due to the relationship. personally and professionally with Musk, including investments in his company. It also alleges that the shareholder vote approving the compensation plan was based on a misleading proxy statement.

The lawsuit alleges that the proxy misrepresented the members of the compensation committee as “independent” and described all of the milestones leading up to the stock option award as “extending” goals. ” means difficult to achieve, although internal projections indicate that the three operational milestones are likely to be achieved within 18 months of shareholder voting.

The defendants’ attorneys noted that the organization’s two authorized consulting firms urged shareholders to reject the plan, however, noting that it would require “significant and significant achievements” perhaps history” and claim that growth “seems to last by any standard”.

“At the time, I thought they were pretty daring,” says Denholm of the milestones.

The plan calls for Musk to rake in billions of dollars if Tesla hits certain operational milestones and market capitalization. For each instance that simultaneously meets a market cap and an operating milestone, Musk, who owned about 22% of Tesla shares when the plan was approved, will receive shares equal to 1% of the shares. vouchers in circulation at the time of issuance. His interest in the company would grow to about 28% if the company’s market capitalization increased by $600 billion.

Each milestone in the plan includes increasing Tesla’s market capitalization by $50 billion and meeting pre-tax profit and revenue growth targets. Musk will get the full benefit of the payment plan, $55.8 billion, only if Tesla hits a market cap of $650 billion and revenue and earnings unmatched within a decade.

To date, Tesla has achieved all 12 market capitalization milestones and 11 operational milestones, leading to the awarding of 11 of the 12 rounds of funding and giving Musk more than $52.4 billion in rights interest. stock picks, according to the lawsuit. Since the funding was awarded, Tesla’s market capitalization has grown from $59 billion to more than $613 billion today, after hitting the $1 trillion mark earlier this year. musk sold Tesla stock to finance the purchase of Twitter, adding downward pressure on stocks.

Shares of Tesla and other automakers have been battered this year, but the Austin, Texas-based company made $5.5 billion in 2021, blowing away its $721 million profit last year. It also produced a record 936,000 vehicles, nearly double its vehicle output in 2020.

Plaintiffs’ attorneys have suggested that encouraging Musk to continue leading Tesla by offering a huge compensation package is unnecessary, because he has never suggested that he might leave. . They also suggest that Musk’s real motive in negotiating this package was to fund his dream of colonizing Mars.

Denholm said the main issue is not how Musk can spend the proceeds of his options grants, but making sure he is motivated and committed to Tesla’s success.

“Honestly, I don’t know how much it costs to do any interplanetary travel,” she said.

In a November 2017 email to former Tesla General Counsel Todd Maron, Musk expressed optimism that the compensation package will be viewed favorably.

“Given that all this will lead to causes that at least maximize the possibility of a good future for humanity, plus all Tesla shareholders will be extremely happy, I think the This will be well received,” he wrote, adding that “it will come as an extremely optimistic view of the future.”



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