WILMINGTON, Del. – Tesla CEO Elon Musk defended his role in the company’s $ 2.6 billion acquisition of SolarCity in court on Monday, arguing there was no scrutiny on the deal.
Shareholders in the lawsuit claim the 2016 deal was a bailout for SolarCity and sued Musk and his fellow board members. While Tesla board members agreed to $ 60 million in late 2020, Musk decided to take the dispute to court.
Musk’s testimony, which began shortly after 9:20 a.m. ET, opened a likely two-week trial in Wilmington, Delaware, before Vice Chancellor Joseph Slights in the Delaware Chancery Court. He spent about an hour being questioned by his own lawyer before the cross-examination began.
The plaintiff’s attorney told Musk it was going to be a long day and the questioning could extend to Tuesday.
If Musk loses, he may have to pay more than $ 2 billion. However, in this case, known as a shareholder derivatives lawsuit, the lawsuit is brought by investors on behalf of a company and not by individuals or funds. If the plaintiffs win, the proceeds can go to Tesla, not the parties who filed the lawsuit.
The big question the process will answer is whether Musk acted in the best interests of Tesla shareholders or whether he made and pushed decisions that primarily affected himself, his family, and other companies in which he was involved. SolarCity and SpaceX, would benefit.
Musk, who showed up in a black suit, white shirt and black tie, said in his testimony that the takeover was not a bailout. He also said he hadn’t pressured fellow board members.
“Since this was a stock transaction and I owned almost exactly the same percentage of both, there was no financial gain,” Musk told his attorney at the booth. He said he had no control over board appointments, dismissals, or theirs Compensation.
Musk said that, frankly, he didn’t even want to be in control of a company.
“I’ve tried very hard not to be the CEO of Tesla,” said Musk. “I don’t like being the boss of anyone,” he added, saying he doesn’t think he is seen by the public as the controller of the company.
Musk said the SolarCity deal was part of his “master plan,” written in 2006, designed to accelerate the emergence of sustainable energy.
“I have great respect for the court, but not for you, sir.”
Musk’s sense of humor was also brought up in court, with Shareholder Attorney Randy Baron referring to Musk’s self-designation as the “Technoking of Tesla”. The interrogation was aimed at showing Musk’s control of taking action without the approval of the board of directors.
Musk pointed out that Zach Kirkhorn, the company’s chief financial officer, had also received a new title called “Master of Coin”. “Let’s not forget that,” he said, looking smug. (Musk argued that this created a free press, which was good for the company as it led to more cars being sold.)
The CEO also has a history of contentious interactions with lawyers and federal regulators. That became clearer when Baron started cross-examining Musk. Baron began by showing clips of Musk’s 2019 testimony in which Musk repeatedly called the suit a waste of time and said Baron was a “shameful person.”
Speaking of Musk’s behavior, Baron asked if he was “mocking” for any reason in his testimony, saying the behavior was “not for Tesla’s benefit or for an advantage”.
“I think you are a bad person,” Musk replied. He said Baron was “cared for by criminals and then continued to be cared for by criminals”.
“That’s why I don’t respect you,” he said. “I have great respect for the court, but not for you, sir.”
The two also argued back and forth over the length of Musk’s replies, with Baron calling them unnecessarily expanded anecdotes that kept the day up. Musk repeatedly avoided answering yes or no, saying they were incomplete.
After an hour’s lunch break, Baron shifted his question to study Solar City’s finances.
Musk repeatedly argued that Solar City would have been able to raise capital even if it hadn’t been acquired by Tesla.
“I firmly believe that Solar City would have been able to raise money independently,” said Musk, keeping a cool head after more than six hours in court.
Baron also argued that Musk “decided” that he would prefer to purchase Solar City rather than spend time raising funds without the approval of the board of directors.
The court adjourned for the day at 4:45 p.m. ET. Musk is expected to resume his testimony Tuesday morning.
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