Tesla on trial: Autopilot and Elon Musk's $56 billion pay package under scrutiny in separate cases

Tesla on trial: Autopilot and Elon Musk’s $56 billion pay package under scrutiny in separate cases

As if he hadn’t had enough, Elon Musk will find himself in court later this week to defend his $56 billion salary package against claims by Tesla shareholders that he was rigged with easy performance targets. .

And that’s not all ! On Tuesday in Los Angeles, a Tesla Model S owner stands trial for manslaughter in a case that experts say is the first-of-its-kind legal test of whether a human driver is responsible in a car equipped with advanced driver assistance technology. the driving. like Tesla’s autopilot.

Taken together, the twin trials represent a critical test for Musk’s multitasking skills

Taken together, the twin trials represent a critical test for Musk’s multitasking skills. He will speak at a trial, and while Tesla won’t face charges in the manslaughter case, the company’s top aides will certainly follow his developments. Musk’s acquisition of Twitter has already done much to diminish both his wealth and his personal brand. Depending on the results of these cases, the reputation of its main revenue-generating company – Tesla – could also be eroded.

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

Let’s review what’s at stake in these two cases, starting with Musk’s Tesla compensation lawsuit.

Musk was able to avoid a lawsuit in the Delaware Court of Chancery when he finally agreed to acquire Twitter for its original price of $44 billion. But the controversial CEO will still find himself speaking in court in Wilmington for another case examining the compensation plan Tesla’s board created for Musk in 2018.

The plan, which was approved by Tesla shareholders, was based on the company achieving certain milestones over the next 10 years, including an astronomical market valuation at the time of $650 billion – an amount that was more than 10 times that of the company in 2018. value of approximately $59 billion. Shareholders have approved a total of 12 tranches that Musk must exceed before acquiring the full amount.

The CEO is expected to win the final batch early next year, raising around $56 billion.

In 2021, Tesla’s valuation briefly hit $1 trillion after Hertz announced it was buying 100,000 vehicles from the company to augment the car rental company’s fleet. And when Tesla announced its first-quarter 2022 results, the company exceeded benchmarks that triggered the acquisition of the ninth through 11th of 12 option tranches granted to Musk. The CEO is expected to win the final batch early next year, raising around $56 billion, the largest compensation given to anyone on Earth by a publicly traded company.

The lawsuit 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 Chancellor Kathaleen McCormick of the Delaware Court of Chancery. It was the same Kathaleen McCormick who oversaw the legal dispute between Twitter and Musk that ended with his purchase of the social media platform last month.

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

Legal experts said Reuters that boards generally have wide latitude in setting executive compensation. Tesla directors argued that the compensation package did what it was supposed to do – ensure Musk steered the company through tough financial waters to reach a record valuation.

The shareholder who filed the complaint alleges the board lacked independence from Musk when 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-dark black:[&>a:hover]:shadow-highlight-franklin dark:[&>a]:shadow-underline-white md:text-30″>Man versus machine

As Musk takes the stand to testify about his salary, a separate trial focusing on Tesla’s driver assistance technology will take place in Los Angeles. This is a possible test of whether technology has advanced faster than legal standards.

Limousine driver Kevin George Aziz Riad, 27, is on trial for manslaughter after running a red light in his black Tesla Model S, crashing into a Honda Civic and killing two people. The LA County prosecutor does not mention Autopilot in his charges against Riad, but the National Highway Traffic Safety Administration has confirmed that the driver assistance feature was active at the time of the incident. The agency plans to publish the findings of the investigation soon.

This is a possible test of whether technology has advanced faster than legal standards

Autopilot, which can control steering and braking functions, as well as perform automatic lane changes on some highways, has come under increased scrutiny from federal regulators.

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

Legal experts believe prosecutors will struggle to prove the human driver guilty when at least some of the tasks are controlled by autopilot. Notably, Tesla does not face charges in this case. On its website, Tesla states that its driver assistance systems “require active driver supervision and do not make the vehicle autonomous”.

Many Tesla drivers have been caught misusing Autopilot, and some have even gone public with the results themselves. Drivers have been found sleeping in the passenger seat or in the back of their vehicles while driving at high speeds on congested highways. A Canadian has been charged with reckless driving after being arrested for sleeping while traveling at 93mph in a Tesla. A class action lawsuit was recently filed in San Francisco alleging that Tesla’s marketing of Autopilot and its full self-driving feature is misleading and misleading.

Many Tesla Drivers Have Been Caught Misusing Autopilot

Some safety experts have argued that driver assist technology like Autopilot encourages drivers to be less attentive. Musk claimed Tesla’s Autopilot could save half a million lives if rolled out universally. Meanwhile, the US Department of Transportation has recently started collecting data on ADAS-related crashes, but it’s too early to glean much information from it.

Riad’s lawyers will likely cite the Justice Department’s investigation, as well as the class action lawsuit, as evidence that their client is not solely responsible for the fatal crash. Regardless of the outcome, Tesla’s reputation as a demanding, risk-tolerant automaker is likely to come under intense scrutiny.

“It should not be assumed that Riad was blindly relying on Autopilot just because he was driving a Tesla,” wrote criminal defense attorney Cody Warner, who specializes in self-driving vehicles. Law360. “But it’s hard to escape the conclusion that Tesla’s recent reputation for moving fast and breaking things – even at the expense of public safety – has been blamed on Riad.”

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