Electric carmaker Tesla Inc (NASDAQ: TSLA) and CEO Elon Musk are facing a trial over the latter's 2018 pay package that was at the time worth $2.5 billion, CNBC reported on Wednesday, citing filings first published by legal transparency database PlainSite.
What Happened: Tesla shareholder Richard J. Tornetta had sued Musk and Tesla after the package was cleared, alleging it was excessive and that the board had breached its fiduciary duty by authorizing it, according to CNBC.
Musk already owned 20% of Tesla when the plan was approved in 2018. The payout plan included 101.3 million stock options (adjusted for the 5-for-1 stock split in 2020) in a total of 12 milestone-based tranches.
The plan also entitled Musk to receive $55 billion in compensation if he managed to lead Tesla to a market capitalization of $650 billion within a decade and hits revenue and earnings targets.
Tesla breached the $1 trillion market cap last year, boosting Musk’s net worth and making him the world’s richest person.
See Also: Tesla Joins The Trillion-Dollar Club: Why Elon Musk Finds It 'Strange'
Case Goes To Trial: Musk's attorneys had previously requested the court for a summary judgment and sought to have the case dismissed, although a court chancellor later canceled the oral argument and said the case would head into a trial.
Tornetta sought to invalidate the option grant from the 2018 plan, alleging that Musk had made his own payment plan with help from the company’s then-general counsel, Todd Maron. Maron left the company in late 2018.
The trial is scheduled to be held on April 18 at a Delaware Chancery court, though the date could change.
Price Action: Tesla shares closed 1.8% higher at $879.9 on Wednesday.
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