Elon Musk is going to trial as part of a lawsuit over his reported 10-figure pay package from 2018.- Musk got around $2.5 billion in stock options in 2018, according to reports.
CNBC reported that Musk, who also chairs Tesla's board and is its largest shareholder, got around $2.5 billion in stock options in 2018, while The New York Times put it at around $2.3 billion.
Shareholder Richard J. Tornetta sued Musk and Tesla's board in a class-action lawsuit in June 2018, which accused both parties of breaching their fiduciary duties and Musk of unjust enrichment over the company's CEO Performance Award.
Tesla unveiled the 10-year performance award for Musk, who also leads SpaceX, in January 2018. The plan would incentivize Musk both to continue leading Tesla in the long term and helping the company achieving in goals, the company said in a proxy statement that February.
"Elon's compensation will be 100% aligned with the interests of our stockholders," Tesla wrote in the statement. The company said that he wouldn't get guaranteed compensation like a salary or cash bonuses, and would instead get stock options that would only vest if Testa did "extraordinarily well."
When the compensation plan was announced in January 2018, Musk was worth around $20 billion, according to the Bloomberg Billionaires Index. Tesla made around $11.75 billion in revenues in 2017.
The compensation agreement between Musk and Tesla is structured around a 10-year grant of 12 tranches of stock options, which would be vested based on Tesla hitting certain targets. At each tranch, Musk would get stock equal to 1% of outstanding shares at the time of the grant.
Tesla said that the preliminary aggregate fair value estimate of the plan was $2.6 billion at the time of its grant. The total package could end up being worth as much as $55.8 billion if Tesla's market capitalization reached close to $650 billion, the company said in the proxy statement.
But the compensation package resulted in backlash from some shareholders, including Tornetta, who felt it was too large.
The new plan was "unfair and "wholly unnecessary," Tornetta wrote in the lawsuit, adding that Musk already had a large equity stake in the company.
The plan was "beyond the bounds of reasonable judgment and is inexplicable on any grounds other than bad faith," the lawsuit said. It argued that Tesla's compensation committee was "fatally conflicted" and that its board couldn't make an independent judgment because of its members' close personal ties to Musk.
The lawsuit has led to a slew of legal filings between Tesla and Tornetta spanning more than three years, including requests for summary judgment.
"I am skeptical that this litigation can be resolved based on the undisputed facts," court chancellor Kathaleen St. Jude McCormick wrote in a filing in late February. She said that she was canceling oral argument on summary judgment motions currently scheduled for April.
"This case is going to trial," she wrote.
Tesla and lawyers for Tornetta didn't immediately respond to Insider's request for comment, made outside of regular working hours.
Musk is worth around $226 billion, according to the Bloomberg Billionaires Index, putting him as the world's wealthiest person. Around two-thirds of this is in Tesla equity.