Elon Musk’s compensation trial for Tesla has begun in a Delaware court

Ira Ehrenpress, who ran a point for Tesla’s board on developing the plan, testified that the pay package included “unusually ambitious and challenging” obstacles and was meant to keep Mr. Musk, the serial entrepreneur, engaged in the auto industry.

The main question in the case is whether Mr. Musk, who owned about 22% of Tesla at the time and had close relationships with several managers, controlled the board’s consideration of his salary package. Mr. Ehrenbrais said Mr. Musk did not dictate the terms of the grant, which is being examined based on Tesla’s assessment and the achievement of several milestones.

The plaintiff alleges that Mr. Musk controlled the process, that the board misled shareholders in obtaining their approval of the stock grant and that the transaction was not necessary to incentivize Mr. Musk.

Cross-examination of Mr. Ehrenpress by the plaintiff’s attorney focused on the extent to which the compensation plan was compatible with what Mr. Musk had sought.

Mr. Musk, who does not accept a salary from Tesla, received all but one of the 12 tranches available under the grant based on Tesla achieving various goals.

The company’s market capitalization has increased more than 10-fold since shareholders approved the CEO’s salary package, helping Tesla become the world’s most valuable automaker and Mr. Musk its richest person.

Counsellor Kathleen McCormick, the judge in the five-day trial without a jury, is not expected to issue a ruling for several months after the trial concludes. The judge also presided over the lawsuit, which was brought by Twitter Inc. To force Mr. Musk to close his $44 billion deal social networking company. The deal closed late last month before the case went to trial.

Mr. Musk is expected to take the stage on Wednesday.

Former general counsel Todd Maron and former chief financial officer Deepak Ahuja are scheduled to testify. Robyn Denholm, who leads Tesla’s board of directors, is scheduled to testify remotely Tuesday morning. The position is also expected to be taken by board member James Murdoch.

The trial comes at a busy time for Mr He left his mark on TwitterAnd lay off about 50% of its employees and implement various product changes. He also runs the rocket company SpaceX.

“I have a lot of work on my plate, that’s for sure.” Mr. Musk said in a virtual appearance At a conference in Indonesia on Monday.

Attorneys representing current and former board members say shareholders were fully aware when they signed off on Mr. Musk’s 2018 salary package.

“At a critical juncture for the company, the plan incentivized Musk to focus his exceptional talents on Tesla when Musk’s future with Tesla was uncertain, especially given his other interests and opportunities,” they said in the lawsuit.

Employee stock options have been at the center of several controversies at Tesla, as the question of who should benefit from the company’s stratospheric rise has fueled tension, the Wall Street Journal reported recently. One of the issues of broader concern to Mr. Musk was that some employees were earning more at Tesla than they were He thought their contributions were worth it.

Write to Rebecca Elliott at [email protected]