Tesla on trial: Elon Musk’s $ 56 billion pay package is under scrutiny in separate cases

As if he didn’t get enough, Elon Musk will find himself in court later this week defending his $ 56 billion pay package against Tesla shareholder allegations that he was rigged with easy performance targets.

And that’s not all! On Tuesday in Los Angeles, the owner of a Tesla Model S is on trial for manslaughter in a case that experts call a one-of-a-kind legal test for the liability of a human driver in a car with advanced vehicle assistance technology. drive like Tesla’s autopilot.

Taken together, the twin trials represent a fundamental test of Musk’s multitasking skills

Taken together, the twin trials represent a fundamental test of Musk’s multitasking skills. He will take a stand in a trial, and while Tesla doesn’t face charges in the manslaughter case, the company’s top deputies will certainly follow his developments. Musk’s acquisition of Twitter has already done a lot to diminish both his wealth and his personal brand. Depending on the outcome of these cases, the reputation of its main revenue-generating company, Tesla, could also be eroded.

a:hover]:shadow-highlight-franklin [&>a]:shadow-underline-black dark:[&>a:hover]:shadow-highlight-franklin dark:[&>a]:shadow-underline-white md:text-30″>The $ 56 billion question

Let’s examine the stakes in both of these cases, starting with the trial on Musk’s compensation to Tesla.

Musk managed to avoid a trial in the Delaware Court of Chancery when he finally agreed to acquire Twitter at its original price of $ 44 billion. But the controversial CEO will still find himself taking a stand before the Wilmington courthouse for a different case examining the compensation plan that Tesla’s board of directors created for Musk in 2018.

The plan, which was approved by Tesla’s shareholders, expected the company to achieve certain milestones over the next 10 years, including an astronomical market valuation of $ 650 billion at the time, an amount that was more than 10 times that of the company in the past. 2018, worth approximately $ 59 billion. Shareholders have approved a total of 12 tranches that Musk must overcome before vesting the full amount.

The CEO is expected to earn the last batch early next year, allowing him to raise about $ 56 billion

In 2021, Tesla’s valuation briefly hit $ 1 trillion after Hertz announced it was buying 100,000 of the company’s vehicles to increase the car rental company’s fleet. And when Tesla reported its first-quarter 2022 earnings, the company outperformed the benchmarks that triggered the vesting from the ninth to the eleventh of the 12 tranches of options granted to Musk. The CEO is expected to earn the last batch early next year, allowing him to raise about $ 56 billion, the largest compensation awarded to anyone on Earth by a publicly traded company.

The trial will focus on whether the compensation package requires Musk to work full-time at Tesla. In addition to overseeing Tesla, he is also helping manage SpaceX, The Boring Company, and Neuralink. And then, of course, there is Twitter.

Fun fact: the case will be decided by Chancellor Kathaleen McCormick of the Delaware Court of Chancery. It is the same Kathaleen McCormick who oversaw the legal dispute between Twitter and Musk that ended with the purchase of the social media platform last month.

Fun fact: the case will be decided by Chancellor Kathaleen McCormick of the Delaware Court of Chancery

Legal experts said Reuters that works councils generally have ample room for maneuver to determine executive compensation. Tesla’s directors said the compensation package did what it was intended to do: make sure Musk led the company through tough financial waters to get a record-breaking valuation.

The filing shareholder argues that the board was not independent of Musk at the time the compensation plan was approved. The board included Musk’s brother Kimbal, as well as friends Antonio Gracias and Steve Jurvetson. (Jurvetson and Gracias have since left Tesla’s board.)

a:hover]:shadow-highlight-franklin [&>a]:shadow-underline-black dark:[&>a:hover]:shadow-highlight-franklin dark:[&>a]:shadow-underline-white md:text-30″>Man versus machine

While Musk takes a stand to testify about his pay, a separate trial will take place in Los Angeles focusing on Tesla’s driver assistance technology. It is a possible test bed for whether technology has advanced faster than legal standards.

Limo driver Kevin George Aziz Riad, 27, is on trial for manslaughter after crossing a red light in his black Tesla Model S, crashing into a Honda Civic and killing two people. The Los Angeles County District Attorney does not mention autopilot in his allegations against Riyadh, but the National Highway Traffic Safety Administration confirmed that the driver assistance feature was active at the time of the accident. The agency plans to publish the survey results soon.

It is a possible test bed for whether technology has advanced faster than legal standards

The autopilot, which can control steering and braking functions, as well as perform automatic lane changes on certain highways, has come under increased scrutiny by federal regulators.

Last year, the National Highway Traffic Safety Administration opened an investigation into more than a dozen accidents involving Tesla vehicles using autopilot that crashed into stationary emergency vehicles. Autopilot has contributed to a number of fatal accidents in the past, and families of deceased drivers have sued Tesla for manslaughter. And last month, it was reported that the Justice Department is investigating dozens of Tesla autopilot crashes, some of which have been fatal.

Legal experts speculate that prosecutors will have a hard time proving the guilt of the human driver when at least some of the tasks are controlled by Autopilot. Notably, Tesla faces no charges in the case. On his website, Tesla states that its driver assistance systems “require active driver supervision and do not make the vehicle autonomous.”

Numerous Tesla drivers have been caught misusing autopilot, and some have even publicized the results themselves. Drivers were found sleeping in the passenger seat or back seat of their vehicles as they accelerated on crowded freeways. A Canadian man was charged with reckless driving after he was stopped for sleeping while traveling at speeds of 150 km / h in a Tesla. A class action lawsuit was recently filed in San Francisco arguing that Tesla’s marketing of autopilot and its full self-driving feature is deceptive and misleading.

Numerous Tesla drivers have been caught misusing autopilot

Some safety experts have said that driver assistance technology such as autopilot encourages drivers to be less careful. Musk said Tesla’s autopilot could save half a million lives if distributed universally. Meanwhile, the U.S. Department of Transportation recently began collecting data on ADAS-related incidents, but it’s too early to get much information.

Lawyers in Riyadh are likely to point to the Department of Justice investigation, as well as the class action, as evidence that their client is not solely responsible for the fatal accident. Whatever the outcome, Tesla’s reputation as a hard-charging automaker that is too comfortable with risk is likely to come under more scrutiny.

“It should not be assumed that Riyadh was blindly relying on autopilot simply because he was driving a Tesla,” wrote criminal defense attorney Cody Warner, who specializes in autonomous vehicles. Law 360. “But it’s hard to escape the conclusion that Tesla’s recent reputation for moving fast and breaking things, even at the expense of public safety, has been attributed to Riyadh.”

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