Elon Musk Wasn't 'Punching The Clock:' Tesla Director Testifies On CEO's Time Commitment To EV Maker In $56B Pay Lawsuit

Elon Musk is facing a shareholder lawsuit in the Delaware Chancery Court over his executive compensation, and a Tesla Inc. (NASDAQ: TSLA) board director, who testified on Monday, strongly defended the billionaire.

What Happened: Ira Ehrenpreis, who has been serving as a director on the electric vehicle maker’s board since 2007, testified on the first day of the weeklong trial.

Richard Tornetta, the plaintiff, in his complaint, alleged that Musk used his dominant position in the company to devise a compensation plan for him in 2018 and also hoodwinked Tesla shareholders into approving it.

See Also: Elon Musk Asked A Top Tesla Executive To Forfeit Unvested Equity Awards And He Promptly Quit: Report

Tornetta claimed in the complaint that a $55.8-billion compensation was paid to a part-time executive, who conceived of the package and dictated its fundamental terms. He also argued in the complaint that shareholder approval was sought with a “materially misleading and omissive” proxy statement, and it was demanded for the purpose of colonizing Mars.

Tornetta was apparently referring to Musk’s fingers in many pies. Apart from running Tesla, he also helmed his SpaceX rocket company and The Boring Company.

When asked by the court why the board did not demand that Musk spend his full time at Tesla, Ehrenpreis said, “We never had the kind of relationship with Elon where he was punching the clock,” reported Reuters. The senior director was reportedly then chairing the committee that developed the pay package.

Musk and the board were focused on achieving targets, not time spent at Tesla, Ehrenpreis added while testifying.

Tesla’s former general counsel Todd Maron also testified on Monday, according to Reuters. He said he was ambivalent about what Musk did with his money if the targets were met, adding that he thought it was irrelevant.

Musk and Tesla directors, who were also named as defendants in the lawsuit, have argued that the compensation package was meant to ensure the former would guide the company through a critical period, which led to a tenfold increase in stock price, the Reuters report said.

Why It’s Important: Tesla is currently facing a similar situation. Following Musk’s purchase of Twitter, his time is majorly spent on turning it around and transforming the social media platform into one of free speech.

Despite the best intentions, most of Musk’s initiatives have backfired. More importantly, the developments have weighed down on Tesla’s stock price. Tesla bull and Morgan Stanley analyst Adam Jonas said in a Monday note that he sees more downside to Tesla stock in the near term, although touting the current weakness as a buying opportunity.

Price Action: In premarket trading on Tuesday, Tesla stock was adding 1.47% to $193.74, according to Benzinga Pro data.

Photo: Courtesy of Wikimedia Commons

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