A week-long trial began today in Delaware for Elon Musk and Tesla over the billionaire’s pay package Elon Musk will see at least one familiar face in court.
Judge Kathleen St. J. McCormick, the same judge who oversaw Twitter’s lawsuit against Musk, is also overseeing the case. Elon Musk is set to take the stand on Wednesday to defend his pay package, which is currently worth around $50 million. Arab and known as the largest compensation package in history.
Richard Tornetta, Dawn of Correction heavy metal drummer and Tesla shareholder, sued Tesla and Musk after the compensation plan was launched in 2018 and was sent to trial earlier this year. In the lawsuit, Tornetta argues that Musk and the automaker violated their fiduciary duties by offering Musk a pay package that was beyond the bounds of reasonable judgment.
The shareholder also argued in the initial lawsuit that it was a conflict of interest that Musk was able to design his own pay package, alleging that the fund made Musk CEO of Tesla without requiring him to work at Electric Gave.
Meanwhile, Tesla has argued that the package was fair because no one else could increase the value of the electric-car maker as much as Musk. The company also argued that the salary was necessary to maintain Musk’s focus on Tesla. It has been instrumental in transforming Tesla from a high-end electric sports car maker to just a car company, it said in a pretrial filing.
The board understood that investing in Musk could yield massive rewards for Tesla shareholders. Elon Musk does not receive a salary from Tesla and his salary package centers on a series of goalposts around the carmaker’s financial growth, which was roughly determined four years ago.
Specifically, the plan includes a 10-year grant of 12 tranches of stock options that vest upon Tesla achieving certain goals. When each milestone is passed, Musk will receive 1% of the shares outstanding at the time of the grant.
Elon Musk’s lawyers said in a court filing that the company exceeded metrics as its market value grew from $53 billion to $690 billion Elon Musk the world’s richest man – according to the Bloomberg Billionaires Index, in about a week had a peak of $189 billion.
Much of this wealth is a result of his equity in Tesla. Tesla shareholders have also benefited from the stock boom. Tesla shares have risen more than 1,000% since the billionaire’s compensation plan began in 2018.
Anat Alon-Beck, assistant professor of law at Case Western Reserve University, told Insider that the outcome of the five-day trial could affect not only Musk’s pay package, but his other companies as well. Alon-Beck also said the trial will hinge on whether Tesla can prove that the company’s board was properly informed and that paper and process were followed when approving the compensation plan.
Although Elon Musk is in better legal shape than his previous battle with Twitter over the compensation lawsuit, multiple legal experts told Insider that 19 witnesses will present their case over the next five days, including people who worked at Tesla in 2018.