do Elon Musk control Tesla The company or Tesla controls Elon Musk? More than $2 The billion dollars depends on this issue, because the trial starts on Monday. Shareholders claimed that Musk used his control of Tesla to force the company to rescue SolarCity in 2016, thereby saving the solar panel manufacturer — and Musk’s investment in the company — from bankruptcy.

The union pension fund and asset management company that led the case hoped that Musk would repay Tesla the $2.6 billion in transaction costs and hand over the profits from his SolarCity stock. If they win, this will be one of the greatest verdicts against individuals.

The two-week trial in the Chancery Court in Wilmington, Delaware will boil down to whether Musk, who owns about 22% of Tesla at the time of the transaction, is a rare controlling shareholder that does not hold a majority stake.

Tulane University Law School Professor Ampton said: “I think it is difficult for the court to ignore the reality that Elon Musk is Elon Musk and his relationship with Tesla.”

She said that given Musk’s celebrity status, his personal relationship with Tesla’s board members, and the financial relationship between these board members and SolarCity, the case may present an unusual situation.

“Putting all of this together may be enough to count as a controlling shareholder,” she said.

Few executives can dominate the company’s image like Musk, who is known for mocking regulators, fighting opponents, and personally interacting with his 57 million Twitter followers.

Tesla said in its 2020 annual report: “We are highly dependent on the services of Elon Musk, Tesla’s Technoking and our CEO.”

The plaintiff claimed that Musk facilitated the negotiations and even pushed the Tesla board to raise rather than lower the price of SolarCity.

According to court records, the higher price benefited Musk, the largest shareholder of SolarCity, which owns about 22% of the shares, and four members of Tesla’s board of directors, who directly or indirectly own SolarCity shares.

The board members settled the allegations against them for $60 million last year and did not admit any mistakes.

The plaintiff also claimed that the transaction benefited the two cousins ​​of Musk, who founded SolarCity, and saved a company that was rapidly short of cash.

Musk has stated that he “completely avoided” board negotiations, and shareholders voted to approve the transaction because it was part of his “master plan, part two” aimed at combining sustainable solar energy with electric self-driving cars. core.

He has stated that the plaintiff believes that the evidence of control is nothing more than strong management.

Musk’s lawyers wrote in a court document: “According to his natural conclusion, almost all “hands-on” and “inspiring” CEOs with minority stakes will be considered controllers.

Legal experts said that if Deputy Prime Minister Joseph Slaters determines that Musk is the controlling shareholder, it will prove that the SolarCity transaction meets the high standards of “completely fair” standards, that is, the review process and price, which will fall on Musk.

Musk pointed out in court documents that the SolarCity transaction was a huge success for Tesla shareholders, showing that this transaction is not only fair, but also a boon. After Tesla split its shares at a ratio of 5 to 1 in 2020, it has risen from nearly US$37 per share at the end of November 2016 to US$652 on Thursday.

Larry Hamermesh, a professor at the Delaware Law School, said: “If the vice president thinks the deal is bad and doesn’t negotiate effectively on behalf of the company, he will veto it.”


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