Source: China Fund News
On January 19, 2016, according to US media sources, some tesla shareholders sued CEO Elon Musk in court, saying that Musk coerced the company's board of directors to reach a transaction to acquire solar power generation company SolarCity in 2016 and required it to repay $13 billion (about 83 billion yuan).
Accused of "orchestrating" to lead the board acquisition
Musk defends himself
At the hearing, the plaintiffs' lawyers said the core point of contention in the lawsuit was whether Musk's instigation of the board's acquisition of SolarCity was a "well-planned financial distress relief" — to alleviate SolarCity's financial crisis at the time. Specifically, the plaintiffs argue that Musk pressured the board to agree to Tesla's then-cash-strapped SolarCity, which in turn was the majority shareholder.
It is reported that in 2016, Tesla acquired SolarCity for $2.6 billion in the form of stocks. Tesla's stock price began to soar after that. The plaintiffs want the court to order Musk to return the Tesla shares he acquired as a result of the transaction, which is about $13 billion at current prices.
Musk did not agree with the plaintiff's complaint. Skew said through his lawyers that the acquisition of Solarcity is part of a long-term plan to build a vertically integrated company. The lawyer said at the hearing that the deal was not meant to bail out SolarCity, that the financial situation was similar to many high-growth tech companies, and that it was not on the verge of bankruptcy.
In addition, Musk said in court documents that such a large compensation is at least 5 times that of similar lawsuits, and that the money would be a "windfall" for the plaintiffs if it were to be returned.
However, the plaintiff's lawyer believes that the acquisition should not have been obtained by Musk from the beginning, which is a "windfall" for Musk. Separately, the plaintiffs pointed out that Tesla was preparing to launch a Model 3 car when it acquired SolarCity, so shareholders believe that the transaction will distract the company and burden Tesla more.
In addition, shareholders claim that although Musk only holds a 22% stake in Tesla, he actually controls the company because of his close relationship with board members, coupled with his strong personality.
If the plaintiffs can prove that Musk manipulated the board, the court is likely to find that the transaction is unfair to shareholders. Musk, for his part, has been telling the court that the deal with SolarCity was largely handled by Tesla's board of directors, and he himself avoided price negotiations.
Another lawyer on behalf of Musk said: "Without Musk, Tesla would probably be dead long ago, and there is no chance that the market value will reach $1 trillion like today." This does not mean that Musk is the controller, but proves that he is an efficient CEO. ”
In July 2021, when he attended Tesla's acquisition of SolarCity, he said that Musk said that he "hated to be a Tesla boss" and preferred to spend time on design and engineering, but Tesla needed him. "Tesla would be 'finished' without me," Musk said.
Tesla was founded in 2003 and successfully went public at the end of June 2010. The listing price was $17 per share, and as of the close of the previous trading day, Tesla's stock price had reached $1,030.5 per share, with a total market capitalization of $1.03 trillion (about 6.6 trillion yuan). Since its listing, Tesla's stock price has risen by nearly 27,000%, far exceeding the big-name technology stocks such as Amazon and Apple, and leaving the traditional car companies GM and Ford far behind.
Sued by shareholders for the second time in two months
Musk has always been known for his outspoken and straightforward personality, which has almost become a golden sign for him. But such a personality and behavior also caused him a lot of trouble.
Less than a month before the shareholder complaint, in December 2021, Musk was sued by shareholders for voting on Twitter on November 6 last year on whether to reduce his holdings of 10% tesla stock, which caused Tesla stock prices to plummet.
Some Tesla shareholders asked to review the company's internal documents and investigate whether the vote violated previous agreements with the SEC. As part of his compensation plan, Musk received 22.8 million stock option awards in 2012 at an strike price of $6.24 per share, which expire in August 2022. Because this portion of the stock is used as an employee benefit or compensation incentive, Musk is required to pay income tax on the proceeds from the exercise of the rights.
The option to sell Musk's stock was supported by 57.9% of the voting participants, and Musk immediately began to sell Tesla stock in large quantities, causing the price of Tesla stock to jump repeatedly between $1,000, and the market value fell to less than $1 trillion at one point, while Musk has cashed out nearly $80 billion.
Over the years, Musk has made many remarks on Twitter, many of which have directly affected the market.
Back in 2018, for example, Musk had tweeted that he would take Tesla private at $420 per share, causing Tesla's stock price to plummet. The SEC subsequently launched an investigation into the matter. Eventually, Musk reached a settlement with the SEC, agreeing to get approval from the company's lawyers when posting a tweet of material information about Tesla.
But despite this, Musk is still moving frequently on Twitter.
On January 14 this year, Musk tweeted that Tesla merchandise will accept Payments for Dogecoin. Dogecoin once soared nearly 20%. In fact, due to Musk's frequent mention and "carrying goods", Dogecoin has soared by 870%, and the limelight once changed the cryptocurrency "big players" Bitcoin and Ethereum.
Require long-term law firms to fire lawyers
Otherwise you will lose tesla business
Tesla has reported good results since the fourth quarter of last year, the stock price has soared, and recently it has been frequently moving - in Chile and Mexico, it has been "buying mines" and locking in important raw materials for electric vehicle batteries. In legal matters, Musk is not at all soft.
On Sunday (January 16), the Wall Street Journal exclusively reported that Tesla's lawyers submitted a document to its partner, Cooley LLP, asking him to fire a lawyer or lose Tesla's business.
It is reported that tesla wants Tory to dismiss the lawyer who worked at the U.S. Securities and Exchange Commission (SEC). Tesla and Musk's relationship with the agency has been strained.
According to US media reports, Cooley did not agree to the request, and the lawyer is still one of the partners of the firm. In light of this, Tesla has replaced lawyers from Cooley's firm in several recent lawsuits, and another Musk company, SpaceX, has stopped using lawyers to participate in litigation or supervision.
The reporter checked the information and found that in 2018, Tesla was investigated by the SEC for the above-mentioned Musk considering the privatization of the equity on Twitter, and in the end, Musk and the SEC reached a settlement on related matters, musk paid a fine of $20 million, and resigned as chairman of Tesla.
The lawyer at Cooper Law Firm, who was asked to be fired, was among the investigative team at the time.
Musk's fierce style has attracted cheers and insults for him, but from the perspective of the company's long-term development, it seems that it still needs to converge on the point of edge.
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