A Delaware judge on Monday ordered lawyers representing Tesla Inc. TSLA, -3.46% directors to turn over certain communications that CEO Elon Musk may have shared with the company’s top in-house attorneys before the board approved a compensation plan in 2018 that could net Musk more than $50 billion.
The ruling by Vice Chancellor Joseph Slights Jr. came in response to a motion to compel filed on behalf of shareholders who have accused Musk and Tesla’s board of directors of breaching their fiduciary duties to the company and its stockholders, granting unjust enrichment to Musk and wasting corporate assets.
While granting the plaintiffs access to certain documents that Musk either sent or received, Slights denied access to a broader range of other documents that defense attorneys have argued are similarly protected by attorney-client privilege.
Slights said documents that Musk shared with Tesla general counsel Todd Maron or deputy general counsel Jonathan Chang before the board signed off on the compensation plan should be provided to the shareholder plaintiffs.
The plaintiffs have argued that Chang and Maron, who was Musk’s former divorce attorney, worked to advance Musk’s interests and negotiated on his behalf against the board’s compensation committee.
“Leveraging his control, close personal relationships, and reputation for retribution, Musk co-opted Maron and Chang to help him structure the plan free from committee involvement,” plaintiffs’ attorneys wrote in asking Slights to force the company to turn over documents.
“Musk and his agents handed the committee a fully-baked plan,” they added.
While Slights agreed that communications directly involving Musk should be disclosed, he refused to order defense attorneys to turn over other communications among board members, Chang and Maron, and an outside law firm.
The judge said there was no basis for him to order the production of documents that may be protected by attorney-client privilege when the information might be available from other sources. He noted that Musk, Maron, Chang and compensation committee chair Ira Ehrenpreis have yet to be deposed in the case.
The plaintiffs argued in their motion to compel that Tesla was improperly shielding hundreds of documents that Maron or Chang shared with the compensation committee and its advisers.