Tesla CEO Elon Musk took the stand on Monday to defend his company’s 2016 purchase of ailing solar panel maker SolarCity — and head off a possible judgement that could force him to personally shell out more than $2 billion.
Tesla shareholders are suing Musk in Delaware Chancery Court, claiming that the superstar CEO pressured the company’s board into effectively bailing out SolarCity, a company founded by Musk’s cousins in which the South African-born billionaire held a 22-percent stake.
Testifying in Wilmington on Monday morning, Musk denied that the $2.6 billion deal was crooked.
“Since it was a stock-for-stock transaction and I owned almost exactly the same percentage of both there was no financial gain,” he said.
Musk’s testimony kicked off a trial that is expected to last about two weeks.
If Vice Chancellor Joseph Slights decides that the SolarCity deal was unfair to the plaintiffs — which include union pension funds and asset managers that held Tesla shares — he could order Musk to pay damages.
The suing shareholders want Musk to repay the entire $2.6 billion Tesla spent to buy SolarCity, which would be one of the largest judgments ever against an individual. Slights could also award a smaller amount.
To put the judgement into perspective, Musk is currently pegged by Bloomberg as the world’s second-richest person with a net worth of $180 billion.
During his testimony, Musk — who had a 22-percent stake in Tesla at the time of the SolarCity deal — denied that he improperly pressured board members to approve the purchase, framing entering the solar business as a sensible expansion as part of a strategy he called the “Master Plan, Part Deux.”
He pointed to the fact that he does not control the appointment or compensation of Tesla board members as evidence that he could not have pressured the board into approving the purchase.
“They provide good advice and are rigorous in acting on behalf of shareholders,” Musk said of Tesla’s board members in response to a question by his attorney, Evan Chesler.
Later on, the attorney for the plaintiffs, Randall Baron, warned Musk during cross-examination that the case was “going to be a grind.”
Musk grimaced, poked at the six-inch thick binder exhibit and replied “I can tell by the binder.”
A group of Tesla directors excluding Musk settled allegations from the same lawsuit last year for $60 million, paid by insurance, without admitting fault.
With Post Wires