Elon Musk testifies to defend Tesla’s $ 2.6 billion acquisition of SolarCity in shareholder lawsuit

SpaceX Founder and Chief Engineer Elon Musk speaks during the Satellite 2020 Conference in Washington, DC, the United States on March 9, 2020.

Yasin Öztürk | Anadolu Agency | Getty Images

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.

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 it 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 added that he did not approve the appointment of directors, their removal or their compensation controlled.

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”.

Musk pointed out that Zach Kirkhorn, the company’s chief financial officer, has also received a new title called “Master of Coin”. “Let’s not forget that,” he said, looking smug.

The CEO 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’s testimony is expected to last all Monday. The dish paused for lunch around 12:30 p.m. ET and will return at 1:30 p.m. return

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