30 January 2024 , 23:15
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A judge says Elon Musk must give up a compensation package awarded by Tesla’s board of directors that is potentially worth more than $55 billion.
The ruling in a Delaware court comes five years after a shareholder lawsuit targeted Tesla CEO Musk and the directors. They were accused of breaching their duties to the electric vehicle and solar panel manufacturer, resulting in a waste of corporate assets and unjust enrichment for Musk.
The plaintiff’s lawyers argued that the pay package was dictated by Musk and was the product of sham negotiations with directors who were not independent of him. Defence attorneys said the pay plan was fairly negotiated by a committee of independent directors, contained lofty performance milestones, and was blessed by a shareholder vote that was not even required.
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Elon Musk was accused of breaching duties to Tesla resulting in unjust enrichment (Jimin Kim/SOPA Images/REX/Shutterstock)Meanwhile, in an unrelated Tesla matter, a group of federal appeals court judges in New Orleans is deciding whether a 2018 Twitter post by Musk unlawfully threatened Tesla employees with the loss of stock options if they decided to be represented by a union.
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The National Labor Relations Board said it was an illegal threat. Three judges on the 5th U.S. Circuit Court of Appeals in New Orleans upheld that decision, as well as a related NLRB order that Tesla rehire a fired employee, with back pay.
But the full 5th Circuit later threw out that decision and voted to hear the matter again, resulting in a hearing Thursday before a panel of 17 judges. Attorneys for Tesla, the NLRB and the union grappled with questions including whether the post counted as a threat to workers because it appeared in a public discussion on his personal account and not in the workplace or on a Tesla forum.
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“It's not in the workplace,” Judge Cory Wilson said as he questioned union attorney Daniel Curry. “It's still getting to the workers,” Curry responded. The judges gave no indication when they would rule.
The case involved a post made during United Auto Workers organizing efforts at a Tesla facility in Fremont, California. The post was made years before Musk bought the platform, now known as X, in 2022.
On May 20, 2018, Musk tweeted: “Nothing stopping Tesla team at our car plant from voting union. Could do so tmrw if they wanted. But why pay union dues and give up stock options for nothing? Our safety record is 2X better than when plant was UAW & everybody already gets healthcare.”