Elon Musk managed to keep his temper in check as he wrapped up his second and final day of tough questioning about Tesla Inc.’s 2016 takeover of SolarCity.
Musk, the first and most central witness in the case, often sparred with the plaintiffs’ lawyer during about eight hours on the witness stand. But there were no theatrical moments from one of the most outspoken CEOs.
The world’s second-richest man was the chairman and largest shareholder of both companies at the time of the deal, and the trial centers on how much of a role he played in pushing his board, and shareholders, to approve it. Investors and pension funds who are leading the suit allege that Musk and Tesla’s board breached their fiduciary duties when they agreed to a buyout of the then-struggling installer of rooftop solar panels. Musk is the lone defendant. The rest of the board settled for $60 million last year.
The trial is expected to take a total of two weeks. If Musk wins, and if the judge finds that the deal was a legitimate transaction, it will be another example of Teflon Elon largely escaping consequences. If he loses, Musk could be ordered to dig into his own pocket to hand back the roughly $2 billion that Tesla shelled out for SolarCity. It would also be a hit to his reputation as a tech titan who nearly always gets his way.
Randy Baron, the attorney for the plaintiffs, spent much of Tuesday pressing Musk about his role in negotiating the price for SolarCity and played clips from videotaped depositions of bankers involved in the $2 billion deal. Musk largely kept his cool but was clearly frustrated with the line of questioning. “Your questions are so deceptive it’s silly,” Musk said at one point.
In his testimony Monday, Musk said he had little involvement in the board’s consideration of the SolarCity deal, but Baron noted Tuesday he’d hired lawyers to shepherd the deal through, even though the Tesla board at the time wasn’t interested in it. The billionaire also held weekly meetings to spur the pace of due-diligence efforts needed for the SolarCity acquisition.
Musk didn’t like Baron’s characterization of the meetings -- which didn’t include board members -- as a “cabal” of bankers and lawyers. “You have a habit of using language that is not accurate,” Musk said. “You are trying to conjure up some kind of conspiracy. It’s not good.”
Tesla would have gained from the deal even if it had bought SolarCity and shut it down, Musk said.
“The $3 billion of cash flows is 50 percent higher than the amount we paid,” Musk said. “Even if we had simply bought SolarCity and shut it completely down we would have gotten $3 billion in cash flows for $2 billion. This is a no-brainer.”
Musk repeatedly tangled with Baron on Monday, calling him a “bad human being.” He also made some surprising statements, including saying that he didn’t enjoy being a CEO.
Kimbal Musk, Musk’s younger brother, is the next witness slated to testify. Kimbal Musk is on the boards of both Tesla and SpaceX.
The case is what’s known as a shareholder derivative action, where shareholders are acting to protect the company. If the suit is successful, the proceeds go to Tesla, not to the shareholders who brought the suit.
While Musk is often followed by enamored fans of Tesla and SpaceX wherever he goes, there were few signs of supporters in the Wilmington, Del., courtroom this week. One man watched the trial in an “Occupy Mars” T-shirt, but otherwise the spectators were few. The trial had to be halted Tuesday for two hours because someone vomited in the courtroom.