Tech Startups
As we reported earlier today, SpaceX and Tesla CEO Elon Musk testifies to defend Tesla’s $2.6 billion acquisition of SolarCity after Shareholders filed a lawsuit against him. SolarCity was founded on July 4, 2006, by Musk’s cousins Peter and Lyndon Rive. In 2016, Tesla acquired the company at a cost of approximately $2.6 billion and reorganized its solar business into Tesla Energy.
Randy Baron, attorney for the shareholders, began by showing clips of Musk’s 2019 deposition where Elon Musk repeatedly called the lawsuit a waste of time and said Baron was a “shameful person.” Baron later asked if he was “derisive” in his deposition for any reason and said the conduct was “not for some benefit of Tesla or some benefit to achieve something.”
“I think you are a bad human being,” Musk retorted. He said Baron was “mentored by criminals, then continued to be mentored by criminals.” Musk added, “That is why I do not respect you. I have great respect for the court, but not for you, sir.”
During the trial, Musk said the SolarCity deal was part of his “master plan” to accelerate the advent of sustainable energy. Musk went on to explain that he didn’t control the appointment of board members, their removal, or their compensation.
Musk also told his attorney on the stand that “Since it was a stock-for-stock transaction and I owned almost exactly the same percentage of both there was no financial gain.” At one point during the hearing, Musk said:
“I don’t want to be a CEO, I tried hard not to be the CEO at Tesla, but I had to or it would die. I rather hate being a boss. I’m an engineer.”
After Musk’s statement, Randy Baron, attorney for the shareholders, also brought up Musk’s sense of humor during the hearing and pointed toward Musk’s self-appointment of himself as “Technoking of Tesla.”
The whole drama started after SolarCity shareholders filed a lawsuit against Musk alleging that the deal amounted to a SolarCity bailout that enriched Musk and his family more than it did Tesla, among other things. Musk may end up paying upwards of $2 billion from his personal wealth if the shareholders win their case.
The lawsuit also alleges that Musk and Tesla’s board of directors “overpaid for SolarCity, ignored their own conflicts of interest and failed to disclose ‘troubling facts’ essential to a rational analysis of the proposed deal.”
In addition, shareholders allege that it unfairly enriched the Musk family, who were among the largest shareholders, and that Musk and others failed to disclose all pertinent details and breached their fiduciary responsibilities. Meanwhile, Musk insisted he was “fully recused” from negotiations over the deal.
This news originally appeared in Tech Startups.
