DOVER, Del. – A judge in Delaware on Monday ordered a lawyer representing Tesla Inc. TSLA.
A director to change some of the communications CEO Elon Musk may have shared with the company’s top attorney before the board approved a compensation plan in 2018 that could gross more than $ 50 billion for Musk.
The Deputy Prime Minister’s Decision Joseph Slight, Jr., responded to a move to force a lawsuit filed on behalf of shareholders accusing Musk and Tesla’s board of directors of violating their fiduciary duty on the company and shareholders, causing Musk to be defeated. Unfairly improve and waste company assets.
While allowing plaintiffs to have access to certain documents that Musk sent or received, Slights denied access to a broad range of other documents that defense attorneys argued were similarly protected by attorney and client rights.
Slights said the documents that Musk shared with Tesla General Counsel Todd Maron or Deputy General Counsel Jonathan Chang before the board signed the compensation plan should be submitted to the plaintiffs to shareholders.
The prosecution argued that Chang and Maron, Musk̵7;s former divorce lawyers, worked to promote Musk’s interests and negotiate on his behalf with the committee’s compensation committee.
“Taking advantage of his control, close personal ties and a reputation for revenge, Musk chose Maron and Chang to help him structure the plan without the involvement of the committee,” the plaintiff’s attorney wrote in the request. Slights forced companies to submit documents.
“Musk and his representatives fully submit the plan to the committee,” they added.
While Slights agreed that communications directly related to Musk should be disclosed, he declined to direct defense attorneys to open other communications between board members Chang and Maron and outside law firms.
The judge said there was no basis for him to order the production of documents that could be protected by the prerogative of lawyers and clients when information could be available from other sources. He noted that Musk, Maron, Chang and the chairman of the Ira Ehrenpreis Compensation Committee were not discharged in the case.
The plaintiffs argued in a coercion move that Tesla improperly concealed hundreds of documents Maron or Chang shared with the compensation committee and its advisers.
Attorney Gregory Varallo told Slights on Monday that the plaintiffs in the 2018 case did not yet have an answer to a simple question: “ Whose idea is the largest compensation plan ever designed? ”
“If you read the notes to date, no one seems to know,” Varallo said.
“Before, there was a lot of sausage making that it sparked in the eyes of the compensation committee,” he added.
Vanessa Lavely, a lawyer representing the Tesla Board of Directors, told Slights the committee followed. “Efficient processes” to develop and approve compensation plans.
“There is absolutely no stamping here, and the defendants hope to have the opportunity to present the record to the court,” she said.
In 2019, Slights refused to dismiss the duty infringement claims against Musk and Tesla’s directors and the unfair enrichment claim against Musk.
Under Delaware’s “business judgment” rules, courts generally respect the decisions of the board of directors of the company unless there is evidence that directors are in conflict or act in bad faith. If the plaintiff is able to overcome the presumption of the business judgment rule, the board’s action will be subject to analysis. “Total fairness”, which turns the burden on the company to show that the deal involves both fair trading and fair prices.
Slights said that because the plaintiffs had pleaded sufficiently that Musk was a controlling shareholder and had a conflict of interest, the lawsuit lends itself to. “The suspicion of the trial is rising”
Under the plan, Musk aims to reap billions if electric cars and solar panel makers succeed in ambitious market value and operational milestones. For each of the 12 milestones achieved by the company, Musk, who already owns more than 20% of Tesla when the plan is approved, will receive a share equal to 1% of the shares outstanding at the time of the grant.
Each move includes a $ 50 billion increase in Tesla’s market capitalization and achieving aggressive revenue and pre-tax earnings growth goals.Musk will benefit the full from the $ 55.8 billion payout plan only if he leads. Tesla goes to a market capitalization of $ 650 billion and has an unprecedented revenue and revenue stream within a decade.