Elon Musk says he will find new leader for Twitter
Elon Musk said on Wednesday he expected to reduce his time at Twitter and eventually find a new leader to run the social media company, adding that he hoped to complete an organizational restructuring this week.
Musk made the remarks while testifying in a Delaware court to defend against claims that his $56 billion pay package at Tesla Inc was based on easy to achieve performance targets and was approved by a compliant board of directors.
Tesla investors have been increasingly concerned about the time that Musk is devoting to turning around Twitter.
Shares of Tesla fell three percent at midday.
“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 also admitted that some Tesla engineers were assisting in evaluating Twitter’s engineering teams, but he said it was on a “voluntary basis” and “after hours.”
The billionaire’ s first two weeks as Twitter’s owner has been marked by rapid change and chaos. He quickly fired Twitter’s previous chief executive and other senior leaders and then laid off half of Twitter’s staff earlier this month.
Musk sent an email to Twitter employees early Wednesday, telling them they needed to decide by Thursday whether they wanted to stay on at the company to work “long hours at high intensity” or take a severance package of three months of pay.
Elon Musk said he was completely focused on Tesla in 2017 as the electric car maker was in “crisis.”
Musk, known for his combative testimony, told the court in his opening remarks that he thought it was “extremely unlikely” that Tesla Inc would succeed in achieving his vision in 2016, requiring his full attention.
Tesla shareholder Richard Tornetta sued Musk and the board in 2018 and hopes to prove that 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.
Musk’s testimony before Chancellor Kathaleen McCormick comes as he is struggling to oversee a chaotic overhaul of Twitter Inc, the social media platform he was forced to buy for $44 billion in a separate legal battle before the same judge after trying to back out of that deal.
“I was entirely focused on the execution of the company,” Musk said when questioned about Tesla by his attorney Evan Chesler, adding that he did not dictate the terms of the pay plan.
Musk, the world’s richest person, described how the automaker was struggling to survive in 2017, when the pay package was developed.
“I thought it was extremely unlikely,” he said in response to a question of whether he thought at the time if Tesla would succeed.
Musk 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, and on the stand the billionaire said he focuses his attention where it is needed most, which in 2017 was Tesla.
“So in times of crisis, allocation changes to where the crisis is,” said Musk, who wore a dark suit and tie.
Musk tweeted this week that he was remaining at Twitter’s San Francisco headquarters around the clock until he fixed that company’s problems.
Tornetta has asked the court to rescind the 2018 package, which his attorney Greg Varallo said was $20 billion larger than the annual gross domestic product of the state of Delaware.
The legal team for Musk and the Tesla directors, who are also defendants, 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 $600 billion from around $50 billion.
They have argued the plan was developed by independent board members, advised by outside professionals and with input from large shareholders.
On Monday and Tuesday, the court got a taste of Musk’s testimony through short clips from his 2021 deposition in the litigation. In one clip, Musk dismissed the idea that the board should have discussed requiring that he spend more time with Tesla.
“That would have been silly,” said Musk, who is also the chief executive of rocket company SpaceX and founded tunneling venture The Boring Co.
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.”
Last year, Musk told a lawyer for a shareholder suing him over the 2016 acquisition of SolarCity that he was “a bad human being.”
Musk can also show his charm in court. He apologized from the stand to a British diver whom he called “pedo guy” in a tweet and who sued Musk for defamation. The jury in the case found Musk did not defame the diver.
The disputed Tesla package allows Musk to buy 1 percent 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 percent 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.