Elon Musk to Take Stand in Trial Over His Tesla Compensation Package

Richard Tornetta, a Tesla shareholder, is seeking to nullify Mr. Musk’s grant, alleging the CEO controlled the board’s consideration of his pay package and that the board failed to disclose crucial information to shareholders, who signed off on it. 

Mr. Musk’s expected appearance in the Court of Chancery comes amid a turbulent time for the entrepreneur, who also runs rocket company SpaceX and last month closed a $44 billion takeover of Twitter Inc. He has since laid off around 50% of the social-media platform’s staff and tried to implement various product changes.

Speaking earlier this week at a conference, Mr. Musk said, “I have too much work on my plate, that is for sure.” 

Tesla Chair

Robyn Denholm,

board member

Ira Ehrenpreis,

former Chief Financial Officer

Deepak Ahuja

and former General Counsel

Todd Maron

testified ahead of Mr. Musk. Several of them said Mr. Musk didn’t dictate the terms of the grant, which vests based on Tesla’s valuation and the achievement of various milestones. 

Photos: How Elon Musk Made His Fortune

Ms. Denholm, who testified remotely on Tuesday, called the goals tied to Mr. Musk’s grant “audacious,” while an attorney for the plaintiff displayed Tesla records showing that internal projections leading up to shareholder approval of the pay package contemplated that the company would soon achieve some of the targets.

Mr. Musk, who doesn’t receive a salary from Tesla, has secured all but one of the 12 tranches of options available under the grant. Tesla’s market capitalization has increased more than 10-fold since shareholders signed off on the CEO’s pay package in March 2018, helping it become the world’s most valuable car maker, while making Mr. Musk the globe’s wealthiest person.

The plaintiff alleges the compensation deal was unnecessary to motivate Mr. Musk. A plaintiff’s attorney on Monday pointed to a May 2017 Tesla earnings call on which Mr. Musk said he planned to be actively involved in the company for the rest of his life.

Chancellor Kathaleen McCormick, the judge in the five-day, nonjury trial, isn’t expected to issue a verdict for months after the trial concludes. The judge also presided over Twitter’s lawsuit seeking to compel Mr. Musk to buy the social-media company. That transaction closed before the case went to trial.

Write to Rebecca Elliott at [email protected] and Meghan Bobrowsky at [email protected]