Elon Musk argued for an unprecedented multibillion-dollar pay packet at Tesla so that he could fund his ambition of making humanity a “multi-planetary” species, according to testimony from the world’s richest man in a court case challenging his pay at the electric carmaker.
“If I over-allocate time to Tesla . . . I am not sure that would serve the greater good,” Musk said he told board members during negotiations over a record-breaking package worth upwards of $50bn. The serial entrepreneur contended that the money would help him build his rocket company SpaceX, which hopes to eventually help colonise Mars.
Musk’s testimony came on the third day of court proceedings in a Delaware case in which he, Tesla and some of the company’s board members face claims from investors that the 2018 remuneration package was excessive and enriched him at their expense.
Under cross-examination from the plaintiffs’ lawyer Greg Varallo, Musk denied he was in any meeting of Tesla’s compensation committee in which the “substance” of the terms of his pay deal were discussed. But he acknowledged that he attended the first board meeting where his pay package was formally discussed on June 6 2017.
In a pre-trial deposition, Musk had characterised part of the decision-making process as “me negotiating against myself”. The shareholders who sued had argued the board was “supine” and in effect following orders from the company’s hands-on chief executive.
Musk also testified that he did not seek clearance from the Tesla board for a number of material announcements, mostly made via Twitter, about how much its stock should be worth, and about the rise or fall in supply chain costs facing the manufacturer.
The 51-year-old — who said he flew into Delaware on a red-eye flight straight from Twitter’s California headquarters — told the court that no one on Tesla’s board objected to him drafting in some of the public company’s engineers to examine the state of the software at his new acquisition.
Fewer than 50 Tesla employees were brought in on a voluntary basis to “evaluate some of the engineering”, Musk said. “It was very short term, it lasted for a few days and it was over.”
Musk, who has culled Twitter’s workforce in recent days and experimented with new features, added that he expected “the fundamental organisational restructuring will be done by the end of this week”.
In response to questioning by Varallo, Musk also contradicted his own lawyers’ description of him as being “intimately involved in all aspects of Tesla’s operations, from its strategic direction to its product design”, in their pre-trial argument for the billionaire being deserving of his pay.
“I am not sure I would use the word intimately,” Musk said.
During questioning by his lawyers, Musk defended the profitability and stock price milestones built into the share options package, arguing that given how Tesla was faring at the time, there was no guarantee that he would ever achieve those goals.
“They universally thought it was impossible,” Musk said of media reports and market sentiment in 2018. “I think we were the most shorted stock in the history of the stock market, ever.” There was even a belief that the pay packet was a “Jedi mind trick” designed to pump up the stock price, Musk said.
Tesla’s market value ballooned by more than 1,200 per cent to a peak of almost $700bn in the period since the award was voted through, although it has fallen since to less than $600bn.
Musk testified that he had no “understanding” of the process by which the remuneration plan was devised. He also told his lawyers that he had not contacted Capital Group, one of the company’s largest outside shareholders, before it voted against his pay package.
Musk also took a swipe at the Securities and Exchange Commission, which required him to stand down as Tesla chair in 2018 as part of a settlement over his use of social media.
“Why was there no attention given to FTX, investors lost billions, and yet the SEC continues to haunt me,” he said of the high-profile bankruptcy of the crypto exchange. “It makes no sense.”