Tesla shareholders on Tuesday urged a judge to find out that Elon Musk forced the company’s board into a 2016 deal for SolarCity and demanded that the chief executive be sentenced to pay one of the largest sentences ever. of $13 billion (approximately Rs. 96,980 crore).
“This case has always been about whether the SolarCity acquisition was a bailout, a bailout orchestrated by Elon Musk,” Randy Baron, a shareholder attorney, told the Zoom hearing.
The closing arguments told the key findings of a 10-day trial in July, when Musk spent two days in the stands defending the deal.
The lawsuit by union pension funds and asset managers alleges Musk vigorously armed Tesla’s board to approve the deal for cramped SolarCity, in which Musk was the largest shareholder.
Musk has denied that the deal was part of a decade-old master plan to create a vertically integrated company that would transform energy generation and consumption with SolarCity’s roof panels and Tesla’s cars and batteries.
Evan Chesler, one of the attorneys representing Musk, told the hearing that the deal was not a bailout and that SolarCity was far from insolvent and that its finances resembled many high-growth tech companies.
“They built billions of dollars in long-term value,” Chesler said of SolarCity.
The all-stock deal was valued at $2.6 billion (about Rs. 19,400 crore) in 2016, but Tesla’s stock has skyrocketed since then.
Shareholder attorney Lee Rudy urged Vice Chancellor Joseph Slights of Delaware’s Court of Chancery to order Musk to return the Tesla stock he received, which at its current price is worth about $13 billion (about Rs. 96,980 crore). would be.
Musk said in court documents that such an award would be at least five times the largest award ever in a similar shareholder lawsuit, calling it a “windfall” for plaintiffs.
Rudy said Slights should reckon with Musk’s disdain for the deposition process and the lawsuit, in which he repeatedly clashed with and insulted shareholder attorneys.
“It would be a stroke of luck for Elon Musk if he could hold stocks he never should have gotten in the first place,” Rudy said.
Chesler called the request to order Musk to return the shares in the deal “ridiculous” and said it was ignoring five years of unprecedented success at Tesla.
Tesla’s stock fell 1 percent in afternoon trading to about $1,040 (about Rs. 77,590).
Tesla acquired SolarCity as the electric vehicle maker neared the launch of its Model 3, a mass-market sedan that was pivotal to its strategy. Shareholders argue the deal was an unnecessary distraction and burdened Tesla with SolarCity’s financial woes and debt.
Shareholders argue that despite owning only 22 percent of Tesla, Musk was a controlling shareholder because of his ties to board members and dominant style. If plaintiffs can prove this, it increases the likelihood that the court will conclude that the deal was unfair to shareholders.
Musk’s lawyers said the famed entrepreneur had no power to fire executives or control their salaries, and he abstained from price negotiations on the SolarCity deal.
“Without Elon Musk, Tesla might not exist, let alone be worth $1 trillion (approximately Rs. 74.60.050 crore),” said Vanessa Lavely, a Musk attorney. “That doesn’t make him a controller. That makes him a very effective CEO.”
Slights ended the hearing by saying he expects to rule in about three months.
He said last week that he plans to retire in the coming months and a related lawsuit against Musk’s record pay package has been transferred from Slights to another judge.
© Thomson Reuters 2022