• Make stock options Elon Musk to the richest person in the world
• Shareholder thinks merit is exaggerated
• Trial begins November 14th
Tesla’s share price rally in recent years has made company leader Elon Musk by far the richest person in the world. A native of South Africa, he owns a large stake in the electric carmanufacturer, which was also helped by Musk’s agreement with the board of directors in 2018 to waive any salary and instead only be rewarded with performance bonuses.
record pay
At that time, it was agreed that the Tesla CEO would be able to purchase one percent of Tesla shares at a significantly discounted price each time certain milestones – related to Tesla’s share price and operational goals – were met. Achieving 11 out of 12 such goals, while increasing Tesla’s market cap from $50 billion to as much as $650 billion, Musk raked in a record $56 billion in compensation.
It is not uncommon for managers to be rewarded with stocks or stock options, which allow them to purchase company shares at a specified time and price. This should be an incentive for them to increase the stock market value for their shareholders. Frequently, such stock or option allocations are only vested in managers after a certain period of time, or are only available at a later date – or, as with Elon Musk, when certain previously defined goals have been achieved. While Musk’s earnings were plentiful, he also risked not realizing anything if Tesla hadn’t met performance targets.
part-time CEO
Nevertheless, according to “Reuters”, the billionaire is now being sued for this remuneration system. Tesla shareholder Richard J. Tornetta believes the earnings are far too high and is asking the court to have the package invalidated. Tornetta’s lawyers argue that Elon Musk was basically just a “part-time CEO” at Tesla, only working Tuesdays, Wednesdays and Fridays for the electric car pioneer, while he worked for the space company SpaceX on Mondays and Fridays , which he also heads, had been active. The package didn’t get Musk to focus on Tesla’s success.
The Tesla group counters that the salary package was not about Musk being on site for a certain number of hours, but that “bold” goals were achieved that would make both Musk and shareholders like Tornetta richer. This was achieved, after all, shareholders could look forward to a tenfold increase in their investment.
rope teams
But according to Tornetta, the board set goals that were too easy. He claims that Elon Musk was in control of the board because the directors were associated with him and cites numerous examples to prove this. As a result, the Board members also failed to advise shareholders that the first performance targets were likely to be met based on internal estimates.
As “Reuters” reports, the case will now be heard at the Delaware Chancery Court from November 14, 2022. Legal experts assumed that this would be a complicated legal process.
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