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Musk tells SolarCity trial that Tesla would 'die' if he wasn't CEO

Stock MarketsJul 12, 2021 11:41PM ET
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3/3 © Reuters. FILE PHOTO: Tesla Inc CEO Elon Musk walks next to a screen showing an image of Tesla Model 3 car during an opening ceremony for Tesla China-made Model Y program in Shanghai, China January 7, 2020. REUTERS/Aly Song/File Photo 2/3

By Tom Hals and Sierra Jackson

WILMINGTON, Del. (Reuters) - Elon Musk insisted in court that Tesla (NASDAQ:TSLA) Inc's board controls the company but also said the electric vehicle maker would "die" if he wasn't the chief executive, as he ended his first day of testimony on Monday in defense of Tesla's 2016 acquisition of SolarCity.

The lawsuit by union pension funds and asset managers alleges the celebrity CEO strong-armed Tesla's board of directors into depleting the company’s assets with the $2.6 billion all-stock deal for SolarCity.

The CEO at the time owned a roughly 22% stake in both Tesla and SolarCity, which was founded by his cousins, and some Tesla shareholders alleged the deal was aimed at bailing out Musk's investment in the solar panel company.

Kicking off a two-week trial in Wilmington, Delaware, Musk, wearing a dark suit, white shirt and a slightly askew dark tie, testified that he has tried "very hard not to be the CEO of Tesla, but I have to or frankly Tesla is going to die.”

Board members and others involved in the deal will testify beginning as soon as Tuesday, when Musk will also return to the witness stand.

The lawsuit accuses Musk of dominating the board's deal discussions, pushing Tesla to pay more for SolarCity and misleading shareholders about the company's deteriorating financial health.

Musk told the court that the Tesla board handled the SolarCity deal and he was not part of the board committee that negotiated the terms.

"I don't even know what happened," he testified.

Musk responded calmly during cross-examination from shareholder attorney Randall Baron, but Baron's yes or no questions often elicited lengthy, meandering responses. At one point Musk called the lawyer "a bad human being."

Baron asked if the board vetted his Technoking title, which he gave himself in March.

“It generated a whole bunch of free press and Tesla doesn’t advertise and it’s helpful to general sales,” he said. He called the title a joke: “I think I’m funny.”

Shares of Tesla closed up about 4.4% on Monday at $685.75.

Central to the case are claims that despite his minority stake, Musk was a controlling shareholder of Tesla due to his ties to board members and domineering style. That designation would impose a tougher legal standard and increase the likelihood that the court would conclude the deal was unfair to shareholders.

Shareholders have asked the court to order Musk, one of world's richest people, to repay to Tesla what it spent on the deal.

Musk was initially questioned for about an hour by his attorney, Evan Chesler, who asked him to describe his relationship with the board.

“I’d say good," Musk replied. "They work hard and are competent. They provide good advice and are rigorous in acting on behalf of shareholders.”

He said he did not set pay for directors or have the ability to fire or hire them. He also said that because he owned the same percentage of stock in both companies and there was no cash involved in the deal, he didn't benefit. He said the merger was aimed at combining Tesla's battery business with SolarCity's sustainable energy generation.

"There was no financial gain," he testified.

Legal experts said the judge will be looking for evidence that Musk threatened board members or that directors felt they could not stand up to him.

"It would be a surprise to most people if the court were to come out and say that he doesn't control here," said Brian Quinn, a professor at Boston College Law School. "Because he certainly acts like he does."

Tesla's directors settled allegations from the same lawsuit last year for $60 million, paid by insurance, without admitting fault.

Delaware Court of Chancery Vice Chancellor Joseph Slights will likely take months before he issues a ruling.

Musk tells SolarCity trial that Tesla would 'die' if he wasn't CEO
 

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Comments (16)
Nadine Frazer
Nadine Frazer Jul 14, 2021 11:28AM ET
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narcissistic confidence man
Mike Brarey
Mike Brarey Jul 13, 2021 1:49AM ET
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Chief BS Officer
Jokers R Us
Jokers R Us Jul 13, 2021 1:33AM ET
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Tesla is a Ponzi scheme
Adam Adam
Adam Adam Jul 13, 2021 1:15AM ET
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the shareholders got 10 times their return on investment from the time of the acquisition, what are they complaining about ?
sal galeano
sal galeano Jul 12, 2021 11:57PM ET
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yes, it would collapse because it wouldn't have it's puppet asking for more debt.
Michael Angelo
Michael Angelo Jul 12, 2021 9:17PM ET
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King Elon 👑🤡
joe tocco
joe tocco Jul 12, 2021 8:21PM ET
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When will people realize he is another arrogant left coast G-E-E-K. Look to the FAANGcompany's CEOs and you won't be surprized by his behavior. A different culture to be sure.
joe tocco
joe tocco Jul 12, 2021 8:20PM ET
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When will people realize he is another arrogant left coast GEEK. Look to the FAANGcompany's CEOs and you won't be surprized by his behavior. A different culture to be sure.
joe tocco
joe tocco Jul 12, 2021 8:20PM ET
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When will people realize he is another arrogant left coast GEEK. Look to the FAANGcompany's CEOs and you won't be surprized by his behavior. A different culture to be sure.
Me comment
Me comment Jul 12, 2021 6:57PM ET
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This guy have big head or what, beginning to sound a lot like trump.
Klaus Weyers
Klaus Weyers Jul 12, 2021 5:36PM ET
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great job, elon.. none of theses joksters suing or questioning you are capable of real productivity or innovation..Who is John Galt?
Adam Adam
Adam Adam Jul 12, 2021 3:57PM ET
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you can publish day and night, ut doesn't impact the stock anymore. I can even tell you a nice one, a fly smashed a tesla windshield and died on the spot.
Bret Lafrance
Bret Lafrance Jul 12, 2021 11:12AM ET
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Protect the left? 🤖
Kaveh Sun
Kaveh Sun Jul 12, 2021 10:35AM ET
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Pure simple: solarcity owned by his brother. Reuters is the left trying to protect the left
Pankaj Kumar
Pankaj Kumar Jul 12, 2021 9:39AM ET
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Pankaj Kumar
Chris Johnson
Chris Johnson Jul 12, 2021 7:46AM ET
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So... Will he be forced to sell Tesla stocks to pay, or has he funds elsewhere? Good or bad for the stocks if he loses?
Bret Lafrance
Bret Lafrance Jul 12, 2021 7:46AM ET
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chump change except for the lawyers involved
 
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