A trial to determine whether Tesla appropriately paid founder Elon Musk $56 billion in 2018 began Monday in Delaware.
Richard Tornetta, a Tesla shareholder is seeking to void Musk’s 2018 compensation pacakage. He argued that the company’s board failed to disclose key information to shareholders who were misled into approving the pay.
The trial is also exploring whether Musk, who owned around 22% of Tesla at the time, had undue influence on the board. Board members defended the record-breaking package on Monday.
“I wanted to make sure that Elon remained as the leader of Tesla over a longer period of time,” testified Ira Ehrenpreis, a Tesla board member since 2007 and chair of the committee that oversaw the compensation.
He said Musk was also heading other endeavors, including SpaceX and The Boring Company. Tornetta maintains that Musk had a sway in the board’s actions regarding his pay.
Musk and Tesla’s directors, also defendants in the case, have denied wrongdoing. They argue Musk was vital to the company’s growth.
Tesla is 10-times larger than it was in 2018 and is the world’s most valuable car company. Musk, despite losing a chunk of his wealth this year, remains the richest person in the world.
The five-day trial is being overseen by Chancellor Kathaleen McCormick, who in October, ordered Musk to close his $44 billion Twitter deal. Musk finalized his purchase of the social media platform on Oct. 27 and has since made a number of changes to the site.
Tesla’s shareholders, meanwhile, are concerned over the billionaire’s commitment to the carmaker since his purchase of Twitter.
“I have too much work on my plate, that is for sure,” Mr. Musk said in a virtual appearance at a conference in Indonesia Monday.
Lawyers for Musk and the company’s board argued shareholders were sufficiently informed about the 2018 package.
Musk is set to testify in the trial Wednesday.
Shares of Tesla (TSLA) closed on Monday at $190.95, down $5.02, or 2.56%.
