Tesla’s board chairman testified in court Tuesday that Chief Executive Elon Musk’s dreams of space travel played a role in his huge pay package given to him by the board in 2018.
Musk “needs to achieve his goal of one day achieving interplanetary travel,” Tesla Chair Robyn Denholm testified in Delaware Chancery Court. But, he said, the board wanted to ensure Tesla was well looked after. Asked for more details, he said, “To be honest, I don’t know how much interplanetary travel costs.”
Musk is scheduled to testify on Wednesday.
Tesla is being sued in the Chancery Court of Delaware by shareholders who say the board is not independent of Musk but is under his thumb after proposing a $55 billion incentive plan. Board members testified that Musk did not control the board’s decisions. By law, the board’s decision must be independent of the pay plan recipient.
Musk’s current number one spot on Bloomberg’s list of the world’s richest people is based on his $185 billion personal fortune.
Denholm was also asked how much he knew about Musk’s compliance with the executive order Musk signed in 2018 with the Securities and Exchange Commission. His answer was vague.
The order arose out of fraud charges Musk faced after he tweeted that a deal had been made with Saudi Arabia’s sovereign wealth fund to take over Tesla. Musk’s tweet caused Tesla’s stock to spike; the SEC ruled the claims false and accused Musk of stock manipulation.
According to the decree, Musk is required to submit all tweets that are “material” to Tesla before the appointed attorney. In an earlier filing, Musk said he would send such tweets to lawyers and wait for a response. When no response came, he sent the tweet. He said he doesn’t remember ever getting a response to his tweet permission request, and he doesn’t remember how long he waited before sending a message.
The trial judge asked Denholm directly if he knew that Musk had been tweeting while waiting an unspecified amount of time.
“No, I don’t know that,” he said.
The lawsuit alleges that the performance-based stock option grants were negotiated by the compensation committee and approved by Tesla board members who had conflicts of interest due to personal and professional relationships with Musk, including investing in his company. It also alleged that the vote approving the compensation plan was based on misleading proxy statements.
The lawmaker described members of the compensation committee as “not independent,” the lawsuit said.
The Associated Press contributed to this report.
This story originally appeared in the Los Angeles Times.
