Tesla on trial: Autopilot and Elon Musk’s $56 billion pay package are being investigated in separate cases


Elon Musk will find himself in court later this week defending his $56 billion pay package against claims by Tesla shareholders that it was rigged with easy performance targets.

And that’s not all! The owner of a Tesla Model S went on trial on manslaughter charges in Los Angeles on Tuesday, in what experts called the first legal test of the responsibility of a human driver in a car with advanced driver assistance technology. Like Tesla’s autopilot.

Taken together, the twin tests are a critical test of Musk’s multifaceted abilities

Taken together, the twin tests are a critical test of Musk’s multifaceted abilities. He will take the stand in a trial, and while Tesla will not face charges in the manslaughter case, the company’s top deputies will be watching its developments. Musk’s acquisition of Twitter has already done much to diminish both his wealth and his personal brand. Depending on the outcome of these cases, the reputation of his main revenue-generating company, Tesla, may also suffer.

a:hover]:shadow-highlight-franklin [&>a]:shadow-underline-black dark:[&>a:hover]:shadow-highlight-franklin dark:[&>a]:shadow-underline-white md:text-30″>The $56 billion question

Let’s take a look at what’s at stake in both cases, starting with the lawsuit over Musk’s compensation at Tesla.

Musk was finally able to get a trial in Delaware’s Chancery Court when he agreed to buy Twitter for an initial price of $44 billion. But the embattled CEO will still take the stand in a Wilmington court for a different case examining the compensation plan Tesla’s board created for Musk in 2018.

The plan, approved by Tesla shareholders, involved the company reaching certain milestones over the next 10 years, including a seemingly astronomical market value of $650 billion in 2018. worth about 59 billion dollars. Shareholders approved a total of 12 tranches that Musk must pass before paying the full amount.

The CEO is expected to win the final installment early next year, which would give him an opportunity to raise about $56 billion.

In 2021, Tesla’s value briefly hit $1 trillion after Hertz announced it was buying 100,000 of the company’s cars to boost the rental car company’s fleet. And when Tesla reported earnings for the first quarter of 2022, the company beat the benchmarks that led to the issuance of Musk’s 9th through 11th tranches of 12. The CEO is expected to win the final batch early next year, which would give him nearly $56 billion, the largest compensation of any person on Earth from a public company.

The trial will focus on whether the compensation package requires Musk to work full-time at Tesla. In addition to overseeing Tesla, he also helps run SpaceX, The Boring Company, and Neuralink. And then, of course, there’s Twitter.

Fun fact: the case will be decided by Delaware Court of Chancery Chancellor Kathaleen McCormick. This is the same Kathaleen McCormick who oversaw the legal battle between Twitter and Musk that ended last month with his purchase of the social media platform.

Fun fact: the case will be decided by Delaware Court of Chancery Chancellor Kathaleen McCormick

This was reported by legal experts Reuters corporate boards generally have broad discretion to set executive pay. Tesla’s executives argued that the compensation package did what it was intended to do — let Musk steer the company through difficult financial waters to achieve a record price.

The shareholder who sued claims the board was not independent of Musk in approving the compensation plan. The board included Musk’s brother Kimbal, as well as friends Antonio Gracias and Steve Jurvetson. (Jurvetson and Gracias have since left Tesla’s board.)

a:hover]:shadow-highlight-franklin [&>a]:shadow-underline-black dark:[&>a:hover]:shadow-highlight-franklin dark:[&>a]:shadow-underline-white md:text-30″>Man and machine

While Musk will take the stand to testify about his salary, a separate trial focused on Tesla’s driver assistance technology will take place in Los Angeles. This is a possible test case for whether the technology is advancing faster than legal standards.

Limousine driver Kevin George Aziz Riad, 27, has been charged with manslaughter after he ran a red light in a black Tesla Model S and crashed into a Honda Civic, killing two people. The LA County District Attorney did not mention Autopilot in his charges against Riyadh, but the National Highway Traffic Safety Administration confirmed that the driver assistance feature was active at the time of the incident. The agency plans to publish the results of the investigation soon.

This is a possible test case for whether the technology is advancing faster than legal standards

Autopilot, which can control steering and braking functions, as well as perform automatic lane changes while on certain highways, has been the focus of more attention from federal regulators.

Last year, the National Highway Traffic Safety Administration launched an investigation into more than a dozen incidents involving Tesla cars using Autopilot crashing into stationary emergency vehicles. Autopilot has caused a number of fatal accidents in the past, and the families of the deceased drivers have sued Tesla for wrongful death. And last month, it was reported that the Justice Department is investigating dozens of Tesla Autopilot crashes, some of which have been fatal.

Legal experts believe that when at least some tasks are handled by Autopilot, prosecutors will have a hard time proving the guilt of the human driver. Note that Tesla is not facing charges in this case. Tesla says on its website that its driver assistance systems “require active driver control and do not make the vehicle autonomous.”

Numerous Tesla drivers have been caught abusing Autopilot, and some have even announced the consequences themselves. Drivers have been found speeding on busy highways while sleeping in the passenger seat or back seat of their cars. A Canadian man has been charged with careless driving after his Tesla was pulled over for falling asleep while driving at 93 mph. A class action lawsuit was recently filed in San Francisco alleging that Tesla’s marketing of Autopilot and its Full Self-Driving feature was misleading and deceptive.

Numerous Tesla drivers have been caught abusing Autopilot

Some safety experts argue that driver assistance technology like Autopilot encourages drivers to be less careful. Musk claimed that Tesla’s Autopilot could save half a million lives if implemented universally. Meanwhile, the US Department of Transportation recently began collecting data on ADAS-related crashes, but it’s too early to draw too many conclusions.

Riad’s attorneys are likely to point to the Justice Department investigation as well as a class-action lawsuit proving their client was not responsible for the fatal crash. Whatever the outcome, Tesla’s reputation as a hard-charging automaker that’s very comfortable with risk is likely to come under further scrutiny.

“You can’t assume Riyad blindly trusted Autopilot just because he was driving a Tesla,” said Cody Warner, a criminal defense attorney who specializes in autonomous vehicles. Law 360. “But it’s hard to avoid the conclusion that Tesla’s recent reputation for going fast and breaking things — even at the expense of public safety — is attributed to Riyadh.”



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