Tesla has made Elon Musk a billionaire many times over by paying him generously in shares for his work as chief executive of the electric carmaker.
On Wednesday, Mr. Musk is expected in court to defend that compensation, much of which derives from a record-setting pay deal he struck in 2018 with Tesla’s board of directors. The package awarded Mr. Musk options that gave him the right to acquire nearly $50 billion of the company’s stock, helping to make him the world’s richest man. Compensation analysts consider his pay to be stunning even by the dizzying standards of what many chief executives earn in the United States.
In the years since shareholders voted in favor of the pay deal, Mr. Musk has received most of the stock included in the package after meeting goals for revenue, profits and share-price gains laid out in the deal.
In a case being tried in the Delaware Court of Chancery, a shareholder is contending that Tesla’s board did not act independently of Mr. Musk when crafting the package. The shareholder, Richard Tornetta, asserts that Tesla provided “materially misleading” information to investors when it asked them to approve the package. His lawyers have asked the court to void the deal.
The lawsuit contends that many of Tesla’s board members were not truly independent because of their financial and personal ties to Mr. Musk. James Murdoch, the media executive who has been on Tesla’s board since 2017, is expected to take the stand. A few other board members and executives testified on Monday and Tuesday, arguing that the pay package aligned Mr. Musk’s interests with those of shareholders and ensured that he would remain committed to Tesla.
