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Elon Musk's 2018 Pay Plan Hinged On Achieving 'Audacious' Targets: Tesla Chair Robyn Denholm Testifies In Compensation Trial

Benzinga · 11/16/2022 06:51

A lawsuit challenging Tesla Inc. (NASDAQ:TSLA) CEO Elon Musk’s 2018 compensation plan went into the second day of a weeklong trial. Among those who testified included Robyn Denholm, chair of the company’s board.

What Happened: Testifying remotely, Denholm termed the goals tied to Musk’s grant as “audacious" and suggested that Tesla’s operational forecasting was not always reliable, reported The Wall Street Journal. To prove her point, she brought in the example of the Tesla semitrailer truck, which was announced in 2017 and was initially expected to be commercially available in 2019.

Tesla might produce 100 semitrailer trucks this year, as opposed to the thousands of trucks it hoped to make, she noted. Incidentally, Musk has recently confirmed that the first semi trucks will be made available to beverage giant PepsiCo. (NYSE:PEP) in December.

See Also: Charlie Munger Lauds Tesla's Unexpected 'Minor Miracle' In Car Business, Elon Musk Reacts

The plaintiff’s lawyers said in a court filing that the board misled shareholders by suggesting the milestones were challenging and difficult to achieve. It, however, omitted that three performance milestones could be achieved within a year-and-half of the grant date, they argued.

Denholm reiterated senior director Ira Ehrenpreis’ views from Monday and said she was more focused on the results Musk was able to deliver at Tesla than the amount of time he dedicated to the company.

Deepak Ahuja, former CFO at Tesla, concurred with Denholm’s view that the company's internal targets at that time were not easy to achieve, according to WSJ. He clarified that Musk didn’t dictate the terms of the grant, which was supposed to be vested based on Tesla’s valuation and the achievement of certain financial milestones, it added.

What’s Next: Musk is expected to testify on Wednesday when the trial resumes. Others who are scheduled to testify later this week include board member James Murdoch and former board members Antonio Gracias and Brad Buss.

Musk may have to clarify plaintiff Richard Tornetta’s allegation that it was unnecessary to motivate the billionaire with the compensation package, as he had said in the May 2017 earnings call that he planned to be actively involved in the company for the rest of his life.
The plaintiff, a Tesla shareholder, is seeking to nullify Musk’s 2018 compensation package. The shares provided through the grant, which were valued at about $56 billion at that time, were now worth about $52 billion, the WSJ said.

Price Action: Tesla closed Tuesday’s session 1.82% higher at $194.42, according to Benzinga Pro data.

Photo: Courtesy of Wikimedia Commons

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