Let’s discuss what’s at stake in both of these cases, beginning with the trial over Musk’s compensation at Tesla.
Musk avoided a lawsuit 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 nonetheless testify in the Wilmington court on another case examining the compensation plan that Tesla’s board of directors created for Musk in 2018.
The plan, approved by Tesla shareholders, was conditional on the company meeting certain milestones over the next 10 years, including what at the time seemed an astronomical market valuation of $650 billion — an amount more than that than ten times the company’s 2018 value was valued at approximately $59 billion. Shareholders approved a total of 12 tranches, which Musk must surpass before the full amount can vest.
The CEO is expected to earn the final batch early next year, which will allow him to raise an estimated $56 billion
In 2021, Tesla’s valuation briefly hit $1 trillion after Hertz announced it would buy 100,000 of the company’s vehicles to bolster the rental car company’s fleet. And when Tesla reported its earnings for the first quarter of 2022, the company beat benchmarks that triggered the vesting of the ninth through eleventh of 12 tranches of options granted to Musk. The CEO is expected to earn the final tranche early next year, allowing him to collect an estimated $56 billion, the largest compensation anyone on earth will receive from a public company.
The trial will focus on whether the compensation package requires Musk to work full-time at Tesla. In addition to overseeing Tesla, he also helps run 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. This is the same Kathaleen McCormick who oversaw the legal battle between Twitter and Musk that ended with his 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
said that company boards generally have a great deal of latitude in setting executive compensation. Tesla directors have argued that the compensation package did what it was intended to do — ensuring that Musk guided the company through difficult financial waters to achieve a record-breaking valuation. Reuters
The shareholder who filed the lawsuit alleges that the board lacked independence from Musk in approving the compensation plan. The board included Musk’s brother Kimbal and 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″>human versus machine
While Musk takes the stand to testify about his pay, a separate trial focused on Tesla’s driver-assistance technology is taking place in Los Angeles. It is a possible test case for whether the technology has evolved faster than legal standards.
Limousine driver Kevin George Aziz Riad, 27, is on trial for manslaughter after running his black Tesla Model S through a red light, crashing into a Honda Civic and killing two people. The LA County District Attorney doesn’t mention Autopilot in its charges against Riyadh, but the National Highway Traffic Safety Administration confirmed the driver-assistance feature was active at the time of the incident. The agency plans to release its findings from the investigation soon.
It is a possible test case for whether the technology has evolved faster than legal standards
The autopilot, which can control steering and braking functions and carry out automatic lane changes on certain freeways, has come under increased scrutiny by federal authorities.
Last year, the National Highway Traffic Safety Administration launched an investigation into more than a dozen incidents involving Tesla vehicles on Autopilot colliding with stationary emergency vehicles. Autopilot has contributed to a number of fatal accidents in the past, and families of deceased drivers have sued Tesla for wrongful death. And last month it was reported that the Justice Department was investigating dozens of Tesla Autopilot crashes, some of which were fatal.
Lawyers speculate that prosecutors will have a hard time proving the human driver’s guilt if at least some of the tasks are on autopilot. In particular, Tesla will not be charged in the case. Tesla says so on its website
driver assistance systems “require active driver monitoring and do not make the vehicle autonomous.”
Scores of Tesla drivers have been caught abusing autopilot, and some have even publicized the findings themselves. Drivers have been found to sleep in the front or back seat of their vehicle while speeding down crowded freeways. A Canadian has been charged with reckless driving after being stopped to sleep while traveling in a Tesla at 150km/h. A class-action lawsuit was recently filed in San Francisco alleging that Tesla’s marketing of Autopilot and its full self-driving capability is deceptive and misleading.
Scores of Tesla drivers have been caught abusing autopilot
Some safety experts have argued that driver-assistance technologies like Autopilot encourage drivers to be less vigilant. has musk
claims that Tesla’s Autopilot could save half a million lives if used universally. Meanwhile, the U.S. Department of Transportation has recently started collecting data on accidents related to driver assistance systems, but it’s too early to glean much insight.
Riyadh’s lawyers are likely to point to the Justice Department’s investigation, as well as the class action lawsuit, as evidence that their client is not solely responsible for the fatal crash. Whatever the outcome, Tesla’s reputation as a stubborn automaker that’s too risk-averse is likely to come under increased scrutiny.
“It’s unacceptable that Riyadh blindly relied on Autopilot just because he drove a Tesla,” said autonomous vehicle defense attorney Cody Warner.
enrolled . “But it’s hard to resist the conclusion that Tesla’s recent reputation for moving fast and destroying things — even at the expense of public safety — was attributed to Riyadh.” Law360