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The Guardian - US
The Guardian - US
Dominic Rushe and agencies

Musk testifies he will ‘reduce’ time at Twitter and eventually hand over reins

Musk’s testimony comes as he is struggling to oversee a chaotic overhaul of Twitter.
Elon Musk’s testimony comes as he is struggling to oversee a chaotic overhaul of Twitter. Photograph: Mike Blake/Reuters

Elon Musk told a court on Wednesday that he expects to reduce his time at Twitter and eventually find someone else to run the social media company.

“There’s an initial burst of activity needed post-acquisition to reorganize the company,” Musk said in his testimony. “But then I expect to reduce my time at Twitter.”

Musk made the remarks while testifying in a Delaware court to defend a $56bn pay package Tesla awarded him in 2018 that helped make him the world’s richest man.

Tesla shareholder and heavy metal drummer Richard Tornetta has sued Musk and the board claiming Musk used his dominance over Tesla’s board to dictate terms of the package, which did not require him to work at Tesla full-time and came as he was running several other companies.

Musk said the electric car maker was in “crisis” in 2017 and he gave it his full attention. “I was entirely focused on the execution of the company,” Musk said.

Musk’s testimony before chancellor Kathaleen McCormick comes as he is struggling to oversee a chaotic overhaul of Twitter, the social media platform he was forced to buy for $44bn in a separate legal battle before the same judge after trying to back out of that deal.

Earlier this month Musk announced he was cutting half of Twitter’s staff after a “massive” drop in revenue. He told the remaining staff they have until Thursday to decide whether they will leave or confirm they will work “long hours at high intensity” as part of “the new Twitter”.

Musk described how the automaker was struggling to survive in 2017, when the pay package was developed.

He also said he not would accept a pay plan that required him to punch a clock or commit certain hours to Tesla. “I pretty much work all the time,” he said. “I don’t know what a punch clock would achieve.”

Investors are growing concerned about Musk’s focus on Twitter. On the stand, the billionaire said he focuses his attention where it is needed most.

“So in times of crisis, allocation changes to where the crisis is,” said Musk, who wore a dark suit and tie. He had arrived in a black Tesla and was led into the courtroom via a separate entrance due to safety concerns.

Musk has a history of combative testimony and often appears disdainful of lawyers who ask probing questions. He has called opposing attorneys “reprehensible”, questioned their happiness and accused them of “extortion”.

Musk appeared more restrained in Wednesday’s proceedings, although he chafed at the probing questions.

At one point, Musk told the plaintiff’s lawyer, “your question is a complex question that is commonly used to mislead people”.

He acknowledged he wasn’t a lawyer but added “when you’re in enough lawsuits you pick up a few things”.

Musk tweeted this week that he was remaining at Twitter’s San Francisco headquarters around the clock until he fixed that company’s problems and said on Wednesday he had come on an overnight flight from the social media company.

Tornetta has asked the court to rescind the 2018 package, which his attorney Greg Varallo said was $20bn larger than the annual gross domestic product of the state of Delaware.

The legal team for Musk and the Tesla directors have cast the pay package as a set of audacious goals that worked by driving 10-fold growth in Tesla’s stock value, to more than $600bn from around $50bn.

They have argued the plan was developed by independent board members, advised by outside professionals and with input from large shareholders.

The disputed Tesla package allows Musk to buy 1% of Tesla’s stock at a deep discount each time escalating performance and financial targets are met. Otherwise, Musk gets nothing.

Tesla has hit 11 of the 12 targets, according to court papers.

Shareholders generally cannot challenge executive compensation because courts typically defer to the judgment of directors. The Musk case survived a motion to dismiss because it was determined he might be considered a controlling shareholder, which means stricter rules apply.

“There is no case in which a 21.9% shareholder who is also the chief executive has received a structured payout plan of this magnitude,” Lawrence Cunningham, a corporate law professor at George Washington University, said of the lack of precedent.

McCormick is not expected to rule on the case for months.

Reuters contributed to this story

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