Testing Times For Musk As Shareholder Take Him To Court For $56 Billion Pay Package At Tesla

This will be a tough week for the world’s richest man — Elon Musk. Besides the turmoil that has happened because of his polarising acquisition of the micro-blogging platform Twitter, he is due in court as Tesla shareholders have claimed that his $56 Billion pay package at Tesla is not fair as the performance target he set for himself was easy and rigged.

This comes at a time when his personal brand and wealth have taken a hit thanks to the way the Twitter acquisition has been handled. And now Musk is on trial for a pay package at Tesla which is more than he paid for Twitter.

While this happens, in parallel a Tesla Model S owner is on trial as well for manslaughter in a case which is the first of its kind legal test of the responsibility of a human driver in a car with advanced driver assist technology that Tesla has labelled to be self-driving.

Either case going sideways would mean a huge hit to not only Elon Musk, but the Tesla brand which is the primary driver of Musk’s wealth — and this could have a deep impact on what happens to Twitter, Tesla, SpaceX, the Boring Company and Neural Link all ventures that have the imprint of the world’s wealthiest man. This also happens at a time when the world is heading towards recession, tech companies are cutting jobs en masse and the world is in the midst of war.

Musk was awarded $56 billion when in 2018 its shareholders agreed if Tesla achieved $650 billion in valuation in the next 10 years. It did achieve this valuation in 2021 and even went further from the $59 billion mark in 2018. But this valuation has plummeted in part of the global situation and in part because Musk chose to acquire Twitter and the way he has handled things ever since.

Tesla had even briefly hit the $1 trillion mark after Hertz announced that it was purchasing 100,000 vehicles from it. Musk is expected to acquire the final one of his 12 tranches of Tesla stock which would be estimated at $56 billion which would be the largest compensation awarded to anyone from a publicly traded company.

This trial will focus on the fact that Musk needs to be working at Tesla full time, as he now is also the CEO of SpaceX and Twitter and has other side projects as well. This case is also being decided by chancellor Kathleen McCormick who oversaw the legal dispute between Twitter and Musk which was won by Twitter.

Tesla’s directors have claimed that the compensation package did want it was intended to do. Musk had indeed guided the company from the brink of bankruptcy to achieve a record-setting valuation where today despite the drop in its stock price is the most valuable automaker in the world.

The lawsuit however claims that the board lacked independence from Musk as it included his brother Kimbal Musk and friends Steve Jurvetson, the investor behind SpaceX and Antonio Gracias. That being said, Jurvetson and Gracias have left the Tesla board since the lawsuit happened.

The other case is equally important and generally, the media has been critical of AutoPilot and the way it has been pitched as fully self-driving even though internally Tesla engineers also admit it is level 2 ADAS at best. Safety experts have also argued that driver assistance technology also makes drivers less attentive on the road though Musk claims that AutoPilot has saved half a million lives on the road — something that cannot be measured or quantified.

The case involves Kevin George Aziz Riad who ran through a red light in his black Tesla Model S which slammed into a Honda Civic and killed two people. At the time, AutoPilot was active in the car and the NHTSA in the US will be filing a full report on the incident soon. The NHTSA also noted that a number of cars using Tesla’s AutoPilot software had contributed to fatal crashes like one recently in August.

Legal experts say that it will be hard to prove the guilt of a human driver when some of the tasks are handled by AutoPilot. Tesla is not involved in the case and Tesla for its part does say driver assistance systems require active driver supervision.

“It should not be assumed that Riad was blindly relying on Autopilot, simply because he was driving a Tesla. But it’s hard to escape the conclusion that Tesla’s recent reputation for moving quickly and breaking things — even at the expense of public safety — has been imputed to Riad,” said criminal defense attorney Cody Warner, who specializes in autonomous vehicles, wrote in Law360.