Elon Musk’s Mars dream takes center stage in his paid Tesla package experiment

Tesla’s chairman testified in court on Tuesday that CEO Elon Musk’s dream of interplanetary travel played a role in the very rich pay package the board awarded him in 2018.

Tesla president Robyn Denholm said in testimony in the Delaware Chancery Court that Musk “needed to pursue his goal of achieving interplanetary travel one day.” But she said the board wanted to make sure it paid enough attention to Tesla. When asked for more details, she said, “Quite honestly, I don’t know how much it costs to do any interplanetary flight.”

Musk is scheduled to testify on Wednesday.

Tesla is being sued in Delaware Chancery Court by shareholders who say the board was not independent of Musk but instead was under his thumb when he offered a wage incentive plan worth up to $55 billion. The board members testified that Musk exercised no control over the board’s decision. By law, the board’s decision must be independent of the payment plan recipient.

Musk’s current ranking of No. 1 on Bloomberg’s list of the world’s richest individuals is based on an estimated $185 billion in personal wealth.

Denholm was also asked how much she knew about Musk’s compliance with the consent decree Musk signed in 2018 with the Securities and Exchange Commission. Her answers were vague.

The approval decree stemmed from fraud charges Musk faced after he tweeted that a deal had been struck with a Saudi wealth fund to take over Tesla. Musk’s tweet caused Tesla’s stock price to skyrocket. The SEC determined the claim to be false and charged Musk with stock manipulation.

Under the decree, Musk is required to play any “physical” Tesla tweets after an appointed attorney. In an earlier affidavit, Musk said he would send such tweets to an attorney and await a response. If no response comes, he will post the tweet. He said he never recalled receiving a response to permission requests for his tweet, nor did he remember how long he had to wait before posting.

The trial judge asked Denholm directly if she knew Musk was posting tweets after waiting for him for some unspecified time.

She said, “No, I wasn’t aware of that.”

The lawsuit alleges that the performance-based stock option award was 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 investments in his companies. It also alleges that the shareholders’ vote to approve the compensation plan was based on a misleading proxy statement.

The lawsuit stated that the agent wrongly described the members of the compensation committee as “independent.”

The Associated Press contributed to this report.

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