Why Has Warren Musk Become a CEO to Benefit Tesla? An In-Depth Look at the Value Of Tesla Equity Since Early 2018
Warren thinks that Mr. Musk might run the company to maximize badly-needed revenue, even if that means great deals for their competitors and damage to the company. Maybe the opposite will happen. As part of his fiduciary duty to Tesla, Mr. Musk may run Twitter to benefit Tesla: for example, he could subtly shift Twitter algorithms so that praise of Tesla products receive greater attention and criticism of Tesla products will be suppressed.”
Q. On the subject of being heavily invested, I want to focus for a moment on the increase in the value of your equity since early 2018. If we measured the value of Tesla equity that you actually owned, not derivatives or stock options or anything else, just the actual equity, from the point that the plan was approved at the board meeting in January of 2018, and then we took a snapshot of the value of that same equity right before you announced your bid for Twitter, do you have any idea how much it would have increased?
Warren told the board that it had legal responsibilities to fulfill, and asked it to respond to a number of questions by January 3.
The case of Elon Musk, who was on trial for $56 billion pay package from Tesla, before November 16th, 2017: The Delaware Court of Chancery, by Greg Varallo
These days Elon Musk is always on trial in the court of public opinion, but occasionally he’s also on trial in actual court. On Wednesday, November 16th, Musk testified in the Delaware Court of Chancery in the legal trial over his $56 billion pay package from Tesla. You might recall that this is the same court, as well as the judge. Musk would have appeared before if he had not completed his takeover of Twitter, so it was kind of like a peek into an alternate simulation. Even Musk seemed to think so:
Plaintiffs’ lawyer, Attorney Greg Varallo: Mr. Musk, I’m easily confused, so I want to see if you can’t help me. You gave a sworn statement saying that you didn’t remember what people said before June 23rd. Is that still your testimony, or have you changed it? Just in case I misheard what you said.
Which is better, the cold or the warm? There is a binder in front of you with some documents that I may ask you some — I will ask you some questions about. Would you turn to the document labeled JX 48, please.
Let’s take a look at the second page, sir, do you recall? In a paragraph to which Mr. Varallo drew your attention, it says, this is the second paragraph on the page, “I think the amount should be reduced to a 10% increment in my Tesla ownership if I can get us to a $550B valuation, but that should be a fully diluted 10%, factoring in that it dilutes me too.” Do you see that you wrote that, sir?
Please, look at the second paragraph on the first page. It begins “As you know, the initial product….” Is there a paragraph that you have?
In the last paragraph it states that the overarching purpose ofTesla is to help expedite the move from a mine-and-burn hydrocarbons economy to a solar electric economy.
A. Yes. We have executed the elements of this master plan, and then I wrote a part two, which we’ve also done, and I will soon be publishing part three.
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
The Secret Tesla Master Plan: The Third Step of Profit, and What Have We Learned About It? — An Exhibit from the Late Q3 Earnings Call
Elon’s “secret Tesla master plans” have always had an “underpants gnomes” quality to them. Step 1: build sports car. Step 2: use money to build affordable car. This is the third step of profit!
Joe, let us pick up if we can. So this is a new exhibit your counsel sent us late last night for which I’m very appreciative. It looks like the transcript of the Q3 earnings call. Right?
What is the situation? You see that there is — towards the middle of the page, there’s a pretty long answer that you are giving that runs on for several pages, but if you look toward the middle of the page, about five or six paragraphs down, there’s a little paragraph that says, “So — but The Boring Company is maybe 2% of my time. 3% to 5% of my time is Neuralink. The organization is going to a small percentage. A significant amount is divided between each of the two companies.
Q. Thank you. Is it also true that during this October Q3 earnings call just recently, you said that you saw a path to Tesla becoming worth more than Apple and Saudi Aramco combined?
In the late part of 2017: Things got very difficult forTesla, and my time was almost 100 percent. When there is a shortage of time, the time allocation will change to where the crisis is. In the past two years, there was a lot of trouble for the company, including late last year. Yeah.
Q. So if you stayed in the company for several years and achieved a particular level of production for one of the car models, you’d be granted options to purchase 8 percent of the company?
A. The market capitalization and production-based milestones were in the 2012 plan. It required a 30 percent gross margin and multiples of the market cap to achieve that, and a high volume of production to do the same. All of the milestones were achieved except for the 30 percent gross margin. We got to 28 percent, I think.
Q. Do you recall if there was any litigation, anybody sue you or the board, over granting you those ten increments of a half point each for $40 billion in market appreciation?
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
Why would you want to become the CEO of the Tesla Automaker? A question for Ehrenpreis and his support of the company (and many others)
We were not making a car for the sake of making a car, but for the sake of making a car that would give us the highest volume, lowest cost car we could possibly get, and that was the only viable path to success. Despite publishing this master plan, we still received a lot of criticism for making an expensive sports car. I was hoping to deflect some of that criticism, which was partially successful, mostly not successful, by explaining that the only way to achieve an affordable electric car was first to make an expensive car and then secondly to make a less-expensive car of medium volume, which was the Model S, and then third to then make a high-volume, affordable car, which was the Model 3.
A. We missed the timing of the S-curve, and we achieved volume production by the skin of our teeth, very — very closely skirting bankruptcy. That’s why we were shorted so much.
A. Yeah. So there — we were at somewhat of an inflection point here where a decision needed to be made as to whether I would continue to run the company or perhaps somebody else should run the company. Yeah. I didn’t want to be the CEO. I, frankly, don’t want to be CEO of any company. Ira asked if it would be possible to consider a plan similar to the one before that would be high risk and high return, if he was willing to consider it. I said I would consider such a thing.
Q. You recalled that you intended to be involved in Tesla for the rest of your life if you decide to stay as CEO, hopefully stopping before you get old or crazy?
Mr. Ehrenpreis’s role at the company has been one of great support and support for the company. We received many calls between midnight and 1:00 in the morning. He has been a big supporter of the electric car company. But I suspect what you’re referring to is his role as head of the compensation committee. That is just part of his contributions to the company.
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
Are options to purchase all of the stock of Musk’s electric company on a total outstanding shares basis or fully dilute basis? A question from pre-June 23rd
Q. So now I want to talk about — I understand that happened, and we’ll take you through the documents. I just want to talk about pre-June 23rd, which is the first comp committee meeting, the call that you don’t recall the substance of, you think you might have suggested 1 percent per tranche in that call, maybe?
I would like to ask you if you had made a statement before the plan went into effect. Would you look at JX 202 in your book, please.
A. Oh, no. My shares did not count in voting for the plan, nor were the shares of any affiliated party counted in the voting — in the shareholder vote.
Q. Now, just in terms — the terms of the plan are in the record here, so we don’t need to walk through each of the terms, but I just want to ask you about a couple of points about it. Do you recall the option to purchase half a percent of the company’s stock for each round? I think we established that in the 2012 plan, you would receive options to purchase all of the company’s stock for each round.
Q. And how did that compare to what the market cap was, approximately, when you were talking to Mr. Ehrenpreis about the possibility of a new plan? The market cap of Musk’s electric company is unclear at this time.
A. It was more than 40 billion dollars. It varied during 2017, but approximately $40 billion. And — sorry. Yeah, sorry. I think — I think $50 billion increments. And the first — the vesting of the first point would be — require, I think, a $100 billion market cap, so more than double the current market cap of the company.
How do you know what a question is? Okay. So in order to achieve all of the goals in the plan, how much market cap do you need to increase?
Do you remember when there was a debate between you and some of the board members about the issue of whether your options should be granted on a total outstanding shares or fully dilute basis?
A. Well, over time, there would be incremental dilution of the company, and so a given percent would be diluted according to incremental shares that would vest on — essentially, on a fully diluted basis of all the shares vested and that there would be a large number of outstanding shares. If you subtract 10 percent from it’s total value, what would be normally on the order of 10 percent would be much less.
A. Yes. I believe in rough numbers, and I was close to being able to get 28 million shares from the board.
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
Are you sure that I’m going to take a stake in Barclays Capital? A question from Brian Johnson on $elon-musk-tesla-ceo-compensation-trial-full
How come there is a question? Okay. I’d like you to turn to page .0006, please. And do you see toward the bottom of .0006, there’s a question from Brian Johnson, who’s identified as being an analyst from Barclays Capital? Do you see that?
Do you know if there are any questions about this? And on the next page, on 145, Mr. — let me make sure I have the right question. Yes. Mr. Varallo asked, “What did you say in response?” I think it’s similar to what has been done in the past, with even harder milestone, said you. There is more than a larger amount, but with more difficult milestones. I think I proposed a proposal that would result in a 10 percent stake in the company, taking into account my stock’s value. And then it goes on from there. Is that the answer to those questions?
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
The Tesla CEO role at SpaceX and SpaceX: I am the CEO of SpaceX, as CEO of the Elon Musk-Tela Corporation Compensation Trial
The billionaires love to compare their stacks. Apple once hit $1 trillion in value, but that was before the advent of the internet. Of course, since then, Apple hit the $3 trillion mark.
Yes. These assumptions are incredibly difficult to achieve. It is implied by my statements that the stock market values companies on the basis of their price earnings multiple. If Einstein said this, I would think compound interest is the most powerful force in the universe. It could be one of those misattributions. The universe has a powerful force called compound interest.
A. Yes. I was running SpaceX. I should say the CEO role at SpaceX and also at Tesla, it’s less about the CEO but, rather, that I am the one driving the technology. So at SpaceX, it’s really that I am responsible for the engineering of the rockets; and at Tesla, for the technology, you know, in the car that makes it successful. The CEO is often seen as a business-focused role, but in reality my role is more that of an engineer creating technology for the benefit of everyone else and making sure that we have a team of incredible engineers who are capable of achieving those goals. And it is my experience that great engineers will only work for a great engineer, and so I — that is what I — that is my first duty, not that of CEO.
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
Analytical Analysis of a Plan with a Punch Clock for the Compensation of Mr. Ahuja and his Advisory Group at the Tevatron
Q. Would you have accepted a plan that effectively had a punch clock, where you had to punch in certain times and punch out certain times at Tesla in order to get the compensation?
Q. Did you suggest to any of them at any point in this process that if they didn’t support this compensation plan, that you’d do anything, any repercussions, any response, any intimidation of any kind?
A. Absolutely not. The shareholders were sophisticated. They have made decisions according to what they believed would result in the best outcome for them as shareholders. We still do and we had some of the most sophisticated investors in the world.
Q. Did you ever call anybody at Capital Group before the vote on this plan was done to express any views about whether or not they’d vote in favor of the plan?
Q. What was your view about the philosophy of — the nature of the projections that Mr. Ahuja and his group were preparing at that point and you were reviewing to go to the board?
So I would generally say that those projections would be success-oriented, meaning that a lot of things would have to go right, but in reality, not everything will go right and some things will go wrong. It is good to have high hopes for the projected results because that is what most projections are. Some percentage of the projections will be achieved if you lower them. So it’s always a challenge to say, what is the right level of optimism to have in projections. I tend to favor the optimistic side.
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
Plaintiffs’ Lawyers: Elon Musk, Welcome back to Delaware. What have you learned in the years since Musk wore an electric car?
They change their plans to make electric cars when the Model 3 is successful and they are taking market share from them. But one can simply read the press and see what their public statements were about electric vehicles. They thought they had no plans to build electric vehicles. They thought electric vehicles were a joke.
Plaintiffs’ lawyer, Attorney Greg Varallo: Mr. Musk, welcome back to Delaware. Nice to see you again. I hope your travels weren’t too difficult, and I appreciate your giving us this time today. You are occupied in many different directions, I know that.
It is nice to see lawyers having fun at work. Like when they get to ask one of the world’s wealthiest men under oath if he was “stone cold sober” when appointing himself “Technoking”, a real thing that Elon Musk did. Imagine if you could write that SEC filing.
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
Question: Did you consult the board before filing the 8-K about the new title? The role of Technoking as a monarch, but with panache?
Question: Did you consult the board before filing for 8-K about the new title? Answer: No, but it was communicated to the board. I think about Bill Berry and other people.
What is the answer to the question Q. You’ve described the role of Technoking as sort of like a monarch and similar to the role of CEO, but more technologically oriented with more panache than the CTO role and as something that comes with great dance moves and sick beats. Is that true?
Musk loves to say stuff like “comedy is legal,” and then go on banning sprees against people who make parody accounts about him. Comedy was definitely not legal just days before this testimony.
Q. And you’re aware, aren’t you, that this Court issued an opinion in which the Court expressed, “little doubt” that you have the power to direct operational decisions. You don’t contest that, sir?
I would like to be corrected and not just make decisions, because the success of the company is related to that, and if I don’t consult people, then the probability of that decision being wrong is higher.
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
Are you a co-founder of Tesla? When did you ask that question? A comment by M. Musk on SolarCity and how to ask a question?
Do you know how to ask a question? You believe that it was correct that the SEC sent you two letters after the consent decree was amended to make it clear; correct?
My email account is considered to be more secure than others because if someone made it public, they could use it to manipulate the stock.
A. Well, I didn’t really regard this as using Tesla assets, as I had asked just for a voluntary basis, and I did not specify any number of people. I don’t know what the number is but I don’t think it was 50. It was a very small number. Just to be clear, this is de minimis, because there are 120,000 people at the company.
Musk might not want to say he is involved in the operations but that could be because he has a different idea of what management is.
If you left, your departure could disrupt the operations of the company, delay the development of vehicles and services and cause a stock price decline, which is what it has said publicly. Any reason to dispute those disclosures about you and your role, sir?
Attorney Varallo: So this is a question that was asked to you in SolarCity when you were on the stand, Mr. Musk, and the question is “And in it” — and this is talking about the master plan — “you wanted to make sure that people thought that this was the person who was behind Tesla, this person who is synonymous with Tesla, and in doing so you called yourself the co-founder. Correct? And you answered “Yes.”
My main goal in writing that plan was to address criticisms that we were making an expensive car, but we did not want to do that. We wanted to make a car that was affordable, but we needed to make an expensive car, a medium-priced car, and then a lower-cost car first.
The reality is that any first car we made would be expensive, because it was Version 1 of the technology, and it would be at low volume. It would be very expensive to have a sports car or a compact sedan, regardless of what car was made. So the — so people are not prepared to pay a lot of money for a small, compact sedan, but they are prepared to pay a lot of money for a sports car.
There are two important things that should be included in any new technology and one important thing that is needed to create a mass-market product. You need to do at least three major versions of the technology, if not more, and you have to achieve economies of scale. If you were to look at something like, say, cell phones, initial cell phones were extremely expensive and really not very good. Cell phones were affordable to almost everyone because of the economies of scale that made them in volume.
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
The SolarCity case and the role of General Motors in the acquisition of a high-speed electric vehicle, a top-of-the-range EV1
And, in fact, this is really tragic, but General Motors had the electric vehicle 1, the EV1 program, and they actually refused to sell people the car. They just gave it as a lease. As soon as California allowed them off the hook, they had to destroy all the cars so that no one would ever use them again. So that was pretty crazy.
I’d like to talk about some findings that the court made about your role in the SolarCity acquisition. You will find a Memorandum Opinion that was issued resolving the SolarCity case that was brought against you, in your book, so congratulations for that, sir.
Q. So I’ll ask my colleague, the technologist, to see if he can pull up the SolarCity trial transcript, page 79, and specifically lines 14 through 19. Counsel, we’re going to put it on the screen, but I have a full set of the transcripts if you need them.
I will let your counsel ask you about context when he does re-direct. You see it on the screen. Any reason to doubt that you gave that answer to that question, sir?
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
SpaceX employees complain about Musk’s behavior in the public sphere: Is there a way to answer that? The master plan part two: Electric vehicles
SpaceX’s employees would probably be happier if Elon actually just stuck to designing rockets. A letter signed by hundreds of SpaceX employees denounced Musks behavior in the public sphere, saying that it was a constant source of distraction and embarrassment. (SpaceX then fired a bunch of the people who wrote the letter.)
Is there a way to answer this? That is all I need. As necessary, your counsel can refresh the context. The master plan part two was also written and published by you.
A. I have long wanted to do electric vehicles from when I was in college. My graduate studies at Silicon Valley would have focused on energy storage for electric vehicles. So my interest in electric vehicles goes back to when I was practically in high school.
Q. I wonder if you understand that there are three possibilities, yes, no, and I don’t know? Did the person who came up with the idea of the car company choose to do it?
A. I believe you are asking complex questions that are not — where “yes” or “no” is not possible, but “yes” is more accurate than “no.” Your question is a complex one that many people rely on to be accurate.
Q. You know, the funny thing is the way this works is if I ask a complex question, you’ve got a lawyer here who is very well renowned, he’s an excellent lawyer, he’s well paid — I assume he’s well paid, anyway — who will stand up and say, objection, Your Honor, compound question. And then Her Honor will make a ruling. But he hasn’t done that. Would you be kind in your answer to my question?
You typically make a recommendation for senior executive compensation to the compensation committee in the first instance so do you not think that is true?
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
Tesla’s Chief Twittertwit and the SEC’s Consent Determination of “Sell’s Deal” with Human Resources and Conflict of Interest
Tesla stopped accepting Bitcoin just 49 days after launching the option, blaming environmental harm. The company said it sold most of thecryptocurrencies as of Q2 2022.
Q. I want to switch topics for just a few moments and talk about tweeting. Well, it’s true, you became the chief twit ofTwitter on Oct 27 this year.
The settlement with the SEC gave rise to the permanent committee and also charged that committee with oversight of HR issues and conflict-of-interest issues.
Q. Ms. Denholm, who chairs the committee, at least at the time of your deposition, had never asked you to allow her to review a tweet that you were making before you made it; correct?
Q. I agree that the consent decree you entered into with the SEC allowed you not to make a public statement denying, directly or indirectly,any allegation in the complaint or creating the impression that the complaint is without factual basis. Do you recall that as one of the obligations in the consent decree?
Q. You have the right for your lawyer to make an objection. Sadly, you don’t. But I suspect he will if he doesn’t like the question. At the deposition, you did not remember Mr. Berry, or that he was the in-house lawyer, who was reviewing any comments you made to any of the 140 character or longer messages you sent him.
Q. You didn’t know that the process was changed after the letters were received; is that true?
Q: Isn’t it true that the committee that was established to review the process also looked at human resources issues and conflicts of interest pertaining to management?
Do you know what question it is? Changing topics. Did you say during the earnings call that the board was considering a buy-back of the company’s stock?
Got it? You said in July of this year that the commodity prices of Tesla are down more than they are up. Do you recall putting it out?
What is the purpose of the question? That’s fine. Thank you. It’s true, isn’t it, Mr. Musk, that, to put it politely, you hold a rather dim view of the Securities and Exchange Commission of the United States?
That isn’t correct. I — I — there’s — I mean, some of these things do require, I think, a little bit of elaboration, rather than yes or no. The mission of the SEC is good. The mission is being executed well or not in some cases, that’s the question. The SEC fails to investigate things that should be investigated and too much attention is given to things that are not relevant. The recent FTX thing is an example of that. Is there a reason for there to be no attention to FTX? Investors lost billions, and yet the SEC continues to haunt me despite shareholders being greatly rewarded. This makes no sense at all.
Q. I believe it was yesterday, a day that you gave a speech in which you said this commission was, quote, “bastards.” Do you recall saying that?
Q. You mentioned earlier this year that the San Francisco office was, quote, “shamelessly puppets of Wall Street short seller sharks who did nothing to protect actual shareholders?”
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
Is there a law degree needed to go to bar admission? No, but I’m sure you are aware of an obligation in the case of a gun to your head
Q. I suspected that might be the answer. You know, once upon a time, you could read the law and become a lawyer. Even in Delaware, it was not so long ago that you didn’t actually need a law degree. Maybe you are on your way.
Q. There you go. I just want to know if you are aware of an obligation when it comes to the bar admission. I don’t want to hear your opinion on it. I just want to understand whether you’re aware of the obligation, yes or no.
What is the situation? You settled because the loans put a gun to your head and you were wrong in saying that the SEC was wrong. Do you recall that?
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
On Elon Musk’s role in the acquisition of SolarCity, Tesla, and its possible impact on the valuation of the assets of Tesla
Q. Let’s take a look at that tweet. That’s 1555 in your book, and it’s a little bit of the way back. Oh, here it is, it’s also on the screen. Joe is holding the ball. That’s yourTwitter, right?
What do you mean by a question? I want to talk about the findings that the Court made about your role in that acquisition, so I will ask you to turn with me to page.0092. Before we turn to the Court’s findings, true, isn’t it, that that acquisition was very important for both SolarCity and Tesla?
Q. Two bullets down it begins, “Elon was involved in preliminary discussions regarding price during Evercore’s initial presentation….,” and it continues. Do you disagree with the finding of fact, sir?
All right. Well, that’s the point. The next sentence states that Mr. Musk doesn’t recall the dates or substance of any discussions. So that was your sworn, written testimony in this case earlier, correct, that you didn’t recall the substance of any discussions that may have taken place prior to June 23rd?
You don’t recall specifics of the call with Ira Ehrenpreis and you would have no basis in your sworn testimony to dispute the information relayed by the other parties.
You think that you proposed to own an additional 10 percent of the company based on the increase in your own shares. You think that might have happened; right?
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
The Bates stamp number and a plan for me that mirrors my ambitions and mine? A reply to M. Musk’s email to Mr. Straubel
Q. All right. So we want to see if we can help. We can take a look at this if you open the book and you see the Bates stamp number at the bottom right-hand corner. I want to focus on the paragraph beginning on April 9 because it is on your screen. Do you see it on the screen, sir?
Q. I’m going to read it, and I’ll tell you when I’m skipping, but I’ll read the substance of it for the record. It reads — and this is a proxy that was prepared internally and circulated outside the firm, not the final, by the way. The report says that Ira Ehrenpreis, the Chairman of the Compensation Committee of the Board had a discussion with Mr. Musk about using a similar structure for compensation. I’m going to skip this because Mr. Musk indicated that he would like to set 15 goals that would need a $50 billion market cap increase. Mr. Musk proposed that the size of the award was 15% of the current total outstanding shares, which is 1% of the current total outstanding shares being attributed to each of the 15 milestones.
Do you know what it is? If you are present at the meeting, do you think that the board did not talk about the substance or your grant in your presence?
If you do recall, you don’t have a discussion about the substance of your plan, so I would like to explore that as well.
It is in your book. But it’s short enough as well. Focusing on your response to Mr. Straubel’s email, you write — and this is about your plan, right, so he’s asking you, can you do a plan for me that mirrors your goals, and you respond, quote, “I’m planning on something really crazy, but also high risk.” The email was sent to him about a month before the plan was being considered.
Q. I want to show it to you There is no question. Joe, please pull up JX 682 and show the witness .002, the second page. Let’s go up, Joe, to the email on top of that towards the top, begins “No problem ….” Let’s take a look at it.
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
Reply to “Comment on ‘Tesla compensation” from JX 668, in reply to “Hi Nancy, CEO,” by Joy Liu
You sent an email to me about a month ago saying that you would like to take action as soon as possible. No doubt you sent that; right?
Q. Joe, let’s just look at it to make sure we’ve got it straight. Please JX 668. Correct, your email is to your general counsel, Mr. Maron.
A. It was back on track, I suppose. I asked that any compensation discussions be stopped because of the high crisis level at the company.
Let us know what your staff thought about it. Please open to JX 718, and I’ll ask Joe to bring that up on the screen as well. So this is from Joy Liu, and it’s being sent out of the firm to PricewaterhouseCoopers, and you’ll see the second paragraph under “Hi Nancy.” The CEO grants were back on a fast track. Does that aid in setting time and stage for you?
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
Tesla-Ceo Compensation Trial Full-Transscript: Where Have You Go? What Have You Learned in the Last Ten-Years?
Q. The statement of intent never changed, even up to the time of your deposition in this case. True?
Q. It’s true, isn’t it, that you have no recollection of either Robyn or Ira raising with you whether there should be some assurance about the amount of time that you spent on Tesla vis-a-vis other activities. Right?
What is the nature of this question? I didn’t do this math because it’s far too complicated for a lawyer from Delaware. I asked my colleague, who is an actuary and an accountant, if he could do it. What I found was that if you just looked at your shares in those parameters, the value went up from 11.7 billion to 197.3 billion. Order of magnitude, does that sound about right?
The stock has fallen since then. The current stock is a bit less valuable than the analysis done in the past.
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
The Boring Company Opened a Tunnel Under Las Vegas: Is That a Fake Gun? A. Yes, but it isn’t a Real-Time Millionaire
Yes, Elon has a lot of “Bs” as in “billions.” But at the time of writing, he’s now considerably behind Bernard Arnault of LVMH, according to Forbes’ real-time billionaires list.
Q. You wrote that you will stay in Boca 24 hours a day until the Starship flies, despite the pain that it will cause. Did you send that email, sir?
Q. So I’ll represent to you, sir, that’s stipulated as fact for purposes of this trial. The Boring Company opened a tunnel under Las Vegas. Is that correct?
Do you know what the answer is? It’s true, isn’t it, that during the same time you were working on getting the 2018 Tesla plan before stockholders, you were also helping The Boring Company sell flamethrowers. Is that correct?
A. Yes. There is a roofing torch888-607-888-607-888-607- that you can buy888-607-888-607-888-607-888-607-888-607-888-607-888-607- that is888-607- which is888-607- which is888-607- which is888-607- which is similar to a fire888-607- which is888-607-, but888-607-888-607-888-607-888-607- which is not dangerous888-607-888-607- which is888-607- which is It’s literally something you can buy at The Home Depot.
Great. If we could, we could take a look at JX 1567. So this is a series of pictures of the flamethrower in front The Boring Company. Is that a fake gun?
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
The first million dollars of Burnt Hair perfume was sold. Did you buy the product? When did you buy it? What happened when you bought it, and how did you come to Twitter?
A. No. Well, it depends on which date. Burnt Hair perfume was sold in total, or at least we have orders for $3 million worth of perfume, the essence of repugnant desire.
Q. Great. On the day you announced the first million dollars of Burnt Hair being sold, you sent a request to your followers or fans to buy your perfume so that they could follow you on the popular social networking site. Right?
Q. I get it. You have asked your followers to vote on some of the proposals you made for a peace plan for the Ukraine conflict. Correct?
A. I like the product so much, I bought the company. There’s an ad, Hair Club for Men. I bought the company because I liked the product so much. So I guess that’s what happened with Twitter.
Q. I am only spending less than 5% of my time on the acquisition. It ain’t rocket science!” And you continue to talk about being at Starbase, and then you got a lovely picture here suggesting that perhaps you were hearing that your attention was being deflected towards Twitter at the time. Is that what you wanted to say?
Q. By the way, about a day or so after you bought Twitter, the press was reporting that you had brought in Tesla software engineers to review the software code at Twitter. Did that actually happen?
A. It wasn’t to review the code, but just to evaluate some of the engineering talent at the social network. It was just a short evaluation of the engineers on the team.
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
OpenAI vs. Neuralink: How should you spend your time educating your private company to help mitigate the danger to human species posed by artificial intelligence?
What is the situation? And did anyone suggest to you that perhaps as a public company, it might not be a good idea to use the resources of the public company for your private company?
Q. It is a company that develops brain computer interfaces with a long- term goal to help address the human species level threat posed by artificial intelligence. Is that correct?
Q. How’s that coming, by the way? When we talked, you were saying that you expected FDA clearance on an accelerated basis. Did you get it?
Q. Congratulations. I hope you get that. And certainly at the time the plan was being developed, you spent some period of time of your average week at Neuralink. Right?
Q. Well, actually, you know, that’s interesting. In September of ‘17, you recall while this plan was being developed, you asked your brother and Mr. Gracias to look deeply at OpenAI and Neuralink, to advise you whether you should be spending more of your time on these projects?
Q. Joe, let’s pull up JX 362.02. Mr. Musk, this is a series of texts, and I think, happily, there’s only one text I want to focus on. You’ll see here a text from you, and we can scroll up or you can see it, it goes to your brother and Mr. Gracias, but it appears to read, “OpenAI and Neuralink are both critical to a good future for humanity. I believe that I should be spending a higher percentage of time with them. If you could understand both, that would be great. Do you remember when you sent that text?
Q. And after looking at the two companies, Mr. Gracias and your brother came back to you and told you that they generally agreed that these companies could help mitigate the danger to humanity posed by artificial intelligence. Right?
What’s the situation? Is it true that you were supposed to work on Monday, Tuesday, and Thursday at SpaceX, Friday and Saturday at the LA design studio, then catch up work on weekends?
My routine would be that. There would be calls and meetings throughout the week for the company.
Mr. Musk, what we did was we took some answers you gave to interrogatories and put them into percentages and created this chart. At least up until the point of the grant, this is roughly an accurate depiction of your average time in a particular week, understanding that it could be radically different at any particular time. Is that fair to say?
(Elon deleted that tweet about sleeping at Twitter, but here’s what it said: “I’ve been at Twitter SF HQ all night. Will be working and sleeping here until org is fixed.”)
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
Tesla-CEO Compensation Trial Trial: On the Efficient Production of Non-Linear Surface Gravitational Wave and its Sensitivity to Mars
That’s correct, got it. Got it. Let’s shift topics again. There’s been some testimony in this trial about an interview that you gave with Robyn Denholm and Ira Ehrenpreis during the development of the plan. I think it happened in September. Do you recall that Denholm and Ehrenpreis called you to discuss your views on the plan during September? This is 2017.
Let me repeat the question in order to have a clear record of what you say. What you did was you told Robyn and Ira that the benefit you saw in working hard at Tesla to achieve the plan was that you would have money to go to Mars. It’s fair to say?
The audit committee was told what management had to say. The production rate will soon enter the steep portion of manufacturing S-curve, which should lead to non-linear production growth in the weeks ahead. When we talk about growth in a linear fashion, we are referring to it as effectively exponential growth. Right? Is that correct, sir?
Q. Joe, I’d like you to put up on the screen JX 1539. And just for clarity’s sake, Mr. Musk, this is taken from a Tesla presentation. I just want to know if you can tell me if that’s a fair pictorial representation of an S-curve.
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
On the Production of Model 3 Vehicular Vehicles in the Mid-Antenna of the Q3 Earnings Call
A. Yes. Yes, that is. I am sorry. I want to know what you like to call a speeding snail. An escargot. Sorry, but. That begins with a bad joke.
Why didn’t you reply? The production rate on the Model 3 was expected to enter the steep portion of the curve by October of last year.
Q. Let’s look at JX 1540.084. The materials are given to the audit committee. Is model 3 the rate of model 3 production right in the middle of the page?
What is the situation? And understanding that it didn’t quite happen this way as of the date of these materials, that is certainly what management believed. Right? They would tell the truth to the audit committee.
A. Well, like I said, no car company has ever succeeded, but no car company has succeeded in the past hundred years in doing this. So it should not be regarded not as something that will automatically happen but something that is highly unlikely to happen when referenced against the history of the past hundred years.
Q. Yeah. I got it. My question is, as of this point in time, the management told the audit committee that they were about to begin and hit the part of the S-curve related to the Model 3. Right?
What is the topic of the day? On your Q3 earnings call in November of last year, you told analysts you expected a production rate of 5,000 cars per month by March of the following year. Do you recall that?
Q. And drawing your attention, if I can, to page 004, I want to highlight and focus in on the second full paragraph beginning “So, based on what we know.” And in fairness to you, sir, these are remarks that the transcript attributes to you. I’m happy to flip back to the page before, but I’ll make that representation to you. You are talking about the production rate of Model 3 vehicles for late Q1, which is a bit of a small shift, and you state that the Model 3 is a 10-year program. It’s the grand scheme of things net present value calculation, this is immaterial.” Do you recall saying that?
I remember saying something like that. I think the — I think what I was referring to here is that it is a long-term program. Producing the Model 3 will continue after ten years.
Q. That is fine. What you’re really saying here is that in the scheme of things, whether you hit the exponential portion of the S-curve on one day or three months later, it really doesn’t matter because it’s going to be exponential, not linear growth, and it’s going to be fabulous. That’s what you’re saying to the analysts. Right?
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
How Much Do You Need to Sell My Shares? And What About the Last Email on the Bottom of JX 702, JX 678.0002?
A. The number is less than that. As I said, there’s no — the sheer pain required to achieve that goal, I would not wish to inflict upon anyone.
Do you have any information regarding this? So let’s start with the couldn’t sell my shares for five years. At the time that this plan was being worked on, you owned roughly 22 percent of the firm. Right?
Q. Let’s take a look at Exhibit 678, originally. I believe we’ve seen this already, you said in the email that you wanted to move forward with the grant now, but with less haste than before. And let me take a look at this actual exhibit. I will do better that way. Take a look with me at the exhibit, if you would. It’s at 678 in your book.
Do you know what the answer is? And I want to bring you first, if I can, to the second page. And let’s look at the very last email on the bottom of the second page, JX 678.0002. This is Maron from you. Right?
Has there been a shortage in this area? I think it means something less than 15 percent of outstanding shares, because the only number we have seen so far is 15 percent. Right?
Q. All right. Let us look at the next exhibit, JX 702, if we can. And you’ll see a gentleman by the name of Jonathan Chang communicating with Deepak Ahuja, who you identified earlier as the CFO of the company, copying Todd Maron, the general counsel. And what Jonathan is doing is comparing grant size and what it means as a matter of total outstanding shares and fully diluted shares. Right?
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
Is there a lot of socialization or nonwork happening at the time of the SEC election? A question by Mr. Varallo
A. Yes. I should say there wasn’t much socialization. I was working almost all the time, so not a lot of socializing or nonwork happening.
I like this picture, Mr. Musk. It is amazing marketing. I want to see if I get this correct, and if you launched this car with a mannequin in spacesuit, and it’s currently in the air. Is that true to say?
Q. Mr. Varallo, early on in your examination, took you to a page in your deposition, I think it was transcript page 25, where you were asked if you had consulted with the board about your new title of Technoking. Do you recall being asked about that?
Q. Okay, so this is okay. I’d like to put up, Michael, on the screen, page 25, the same page of the transcript of the deposition of June 3, 2021, please. Can we put it up?
Is there any truth in the question, Q. You recall you were asked by Mr. Varallo about some comments you’ve made, tweets you’ve made, that were critical of the San Francisco office of the SEC?
You see, Mr. Musk, there is a section in the statement that says that the board wasn’tominated by Elon. Do you see that?
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
Putting an e-mail to the editor: Why did you call me in June 2017? When did you hear the call? How did you remember?
Ira Ehrenpreis called me to say that we should discuss future compensation, as the milestones for the prior plan had almost entirely been achieved.
I would like to put this on the screen for you to view. Previously, it was marked DDX 1, page 1. Do you see this chart, Mr. Musk, you see down the left-hand side, there are dates going from June 6th of 2017 through January 21st of 2018?
Q. I don’t want to go back through how painful it was, but is it fair to say that you missed the curve pretty substantially from what you were aspiring to?
Elon Musk: I think if you said like the substance of calls, probably; if you say the details of calls or the precise date, I do not have such a good memory.
How come there is a question? No? You do not recall that? You don’t recall how you remembered, but you remember how something happened, but you don’t know how it happened. Right?
Source: https://www.theverge.com/2022/12/22/23465042/elon-musk-tesla-ceo-compensation-trial-full-transcript
The S-Curve. Is It Where Tesla Gets Its Point? (Improved on the S-curve)
Alright. Different topic. The S-curve. You say you missed it, but what you really mean is the timing of hitting the S-curve was missed. The S-curve is where electric vehicle manufacturer,Tesla, hit it. Correct?
Q. The value of Tesla and production went straight up, instead of straight down, because you hit the exponential portion. Right?