Tesla Inc’s TSLA legal team has been asked by a Delaware judge to hand over documents related to the communication before the company board approved a compensation plan in 2018 for CEO Elon Musk, Associated Press reported on Monday.
What Happened: The ruling by Vice Chancellor Joseph Slights Jr. was in response to a motion filed by shareholders who had, in 2018, sued Tesla accusing the electric vehicle maker of granting unjust enrichment to Musk and wasting corporate assets.
Slights has asked Tesla lawyers to provide documents that Musk shared with Tesla general counsel Todd Maron or deputy general counsel Jonathan Chang before the board signed off the compensation plan, as per AP.
See Also: Elon Musk Unlocks $11B In Stock Option Awards As Tesla Q1 Report Meets Targets
As per the plaintiffs, Chang and Maron worked in favor of Musk’s interests and negotiated on his behalf against the board’s compensation committee.
Slights however denied access to documents that are arguably protected by attorney-client privilege, communications among board members and an outside law firm, according to the AP report.
A Tesla attorney told Slights that the board followed “a robust process” to develop and approve the compensation plan.
Why It Matters: Musk, who does not draw a salary from Tesla, could mint billions if Tesla stock hits ambitious market capitalization and operational milestones.
Musk adds stock equal to 1% of outstanding TSLA shares every time certain milestones are hit. There are a total of 12 such tranches outlined in the Tesla CEO's pay package, six of which have already been unlocked. Musk already owned 20% of Tesla when the plan was approved in 2018.
According to the plan, Musk will receive the full benefit of the pay plan, $55.8 billion, only if he leads Tesla to a market capitalization of $650 billion within a decade and hit revenue and earnings targets.
See also: How to Invest in Tesla Stock
Price Action: Tesla shares closed 3.46% lower at $684.90 on Monday. The stock has a 52-week high of $900.40 and 52-week low of $136.61.
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