Transportation Image Credits: Patrick T. Fallon / Bloomberg / Getty Images Tesla shareholders are suing CEO Elon Musk and members of the automaker’s board of directors over Musk’s decision to start xAI , which they say is a competing AI company, and then divert talent and resources from Tesla to the new startup.
The lawsuit is one of the most direct challenges to Musk’s decision to start xAI, and it comes on the heels of his threat to develop AI outside of Tesla unless he is awarded more voting control over the company.
The suit was also filed just a few hours before Tesla is scheduled to host its annual meeting , where shareholders will likely vote to re-ratify the $56 billion compensation package that was struck down by a judge earlier this year.
Musk has long claimed that Tesla’s real value is that it’s not just a maker of electric vehicles, but that it’s actually an AI company . That claim is one reason why Tesla’s stock is priced as high as that of a tech company, and more valuable than all four top automakers combined.
This new complaint was filed Thursday by Cleveland Bakers and Teamsters Pension Fund in Delaware Chancery Court, Daniel Hazen and Micahel Giampietro on behalf of Tesla itself. In it, they allege that Musk and members of Tesla’s board breached fiduciary duties to shareholders and unjustly enriched Musk by allowing the CEO to launch a competing company.
The plaintiffs in the case also say that Musk violated Tesla’s code of business ethics by creating and leading xAI, and that the board has allowed Musk to continue to violate this code unimpeded. They are asking the court to force Musk to disgorge his stake in xAI and hand it over to Tesla.
“The notion that the CEO of a major, publicly-traded Delaware corporation could — with the evident approval of his board — start a competing company, and then divert talent and resources from his corporation to the startup, is preposterous,” the complaint reads. It compares Musk’s actions to a hypothetical situation involving the CEO of Coca-Cola starting a rival […]
Tesla shareholders sue Musk for starting competing AI company
