Twitter deal could bolster lawsuit over Musk's Tesla pay
(Reuters) — Elon Musk's $44 billion takeover of Twitter is helping provide ammunition for an upcoming trial where an investor will argue the CEO's $56 billion pay package from Tesla Inc is a waste of money that failed to secure his full-time services.
The deal for Twitter Inc. and its potential to distract Mr. Musk from Tesla will play an important part of the trial in October, according to one of the shareholder's attorneys.
The lawsuit alleges Mr. Musk created the 10-year package and Tesla's board rubber-stamped it in 2018 without requiring the celebrity CEO to devote himself to the electric vehicle maker.
“Look at most CEO contracts. The first line, it says, ‘You're going to be a full-time CEO and devote substantially full time to the business and affairs of the company.’ That's standard,” said Greg Varallo of Bernstein Litowitz Berger & Grossmann, the firm that is leading the case against the pay deal.
Mr. Musk and Tesla did not respond to requests for comment. In court papers, the defendants said the plan was properly crafted by independent directors, approved by stockholders and has generated unprecedented gains for investors.
Tesla's stock has fallen more than 20% since Mr. Musk disclosed he had taken a 9% stake in Twitter on April 4, partly on concerns he was distracted from the electric vehicle maker's supply chain problems.
The 2018 Tesla pay package grants stock options as the company meets escalating financial goals, which the company said would incentivize his continued leadership. If Tesla met all targets, described as "stretch" goals, the plan would be worth a minimum $56 billion, although as Tesla's stock rises so does the plan's value.
The trial is scheduled to begin Oct. 24 in Wilmington, Delaware and last five days.
