Tesla director tells court Musk’s $56 billion pay wasn’t for punching a clock

A Tesla Inc director took the stand on Monday and defended Elon Musk’s $56 billion pay package against a shareholder’s claims that the entrepreneur dictated terms of the deal to finance his dream of travelling to the planet Mars.

Tesla shareholder Richard Tornetta hopes to prove that Musk used his dominance over the electric vehicle maker’s board to craft the 2018 package and then duped investors into approving it.

The first day of a week-long trial in Wilmington, Delaware, featured testimony from Ira Ehrenpreis, a Tesla director since 2007, who was pressed to explain why the board did not demand that Musk dedicate himself to the company full-time as part of the pay deal.

“We never had the kind of relationship with Elon where he was punching the clock,” said Ehrenpreis, who chaired the committee that developed the pay package.

Ehrenpreis was asked if Musk told him he wanted the compensation to finance interplanetary travel. “Yes, I knew of that aspiration,” he told the court.

Musk is scheduled to testify on Wednesday.

A video clip was played from Musk’s 2021 deposition in which he was asked if the board demanded that he dedicate a certain amount of time to Tesla.

“No, that would have been silly,” Musk responded. Ehrenpreis said Musk and the board were focused on achieving targets, not time spent at Tesla.

Tesla’s shareholders have become concerned that Musk is distracted by Twitter, which he bought for $44 billion last month.

Musk speaking virtually to a business conference on the sidelines of the G20 summit in Bali, Indonesia, on Monday said he had too much on his plate at the moment.

He later tweeted that he had been at Twitter’s San Francisco headquarters all night. “Will be working & sleeping here until org is fixed,” he tweeted.

Tornetta has asked the court to rescind the pay package, which Tornetta’s attorney Greg Varallo said was $20 billion larger than the annual gross domestic product of the state of Delaware.

Musk and Tesla’s directors, who are also defendants, have denied Tornetta’s allegations, arguing that the pay package ensured the entrepreneur would guide Tesla through a critical period, which helped drive the stock tenfold higher.

The case will be decided by Chancellor Kathaleen McCormick of Delaware’s Court of Chancery, who also oversaw the legal dispute between Twitter Inc and Musk.

Legal experts said Musk is in a better legal position in the pay case than he was in Twitter’s lawsuit, which prevented him from walking away from the takeover.

A decision will likely take around three months after the trial and could be appealed to the Delaware Supreme Court.