Elon Musk tested on Wednesday that he was not involved in the discussions among Tesla board members about a 2018 pay package that granted him billions of dollars in stock options, helping to make him the world’s richest person.
Speaking in a courtroom in Wilmington, Del., Mr. Musk pushed back against accusations in a shareholder lawsuit that the electric car company’s board was stacked with friends and other people close to him who did his bidding.
“I was completely focused” on managing Tesla, he said.
The case, in which Mr. Musk tested for less than three hours, centers on a compensation package that awarded Mr. Musk stock options that gave him the right to acquire nearly $50 billion in Tesla shares if the company met certain revenue, profit and share price gain goals. At the time, the deal was one of the largest of its kind, and it has become a template used by many other corporate boards to reward chief executives.
In court documents, lawyers for the shareholder who brought the case, Richard Tornetta, contend that in April 2017 Mr. Musk started to outline the pay deal with a director, Ira Ehrenpreis, who headed the board’s compensation committee. The plaintiff’s lawyers have also said in court filings that Tesla directors and executives said in depositions that the board did not expect Mr. Musk to leave the company and had not begun to identify potential successors to him.
On the witness stand, Mr. Musk also seemed to rebut a claim in the lawsuit that the shares he already owned in Tesla — about 22 percent of the company — were incentive enough. Amid an existential struggle to ramp up manufacturing of the company’s first mass-market car, the Model 3, he said he was considering leaving Tesla.
“We were at an inflection point where we had to decide whether I would run the company or someone else would run the company,” Mr. Musk said. “I did not want to be CEO.”
Lawyers for Mr. Musk and Tesla directors filed a motion to dismiss the suit, but, in 2019, another Delaware judge allowed most of the case to proceed.
The case is being heard by Chancellor Kathaleen McCormick of the Delaware Court of Chancery. She also presided over the short-lived Twitter lawsuit filed in July against Mr. Musk to force him to go through with the acquisition of the social media company after he sought to back out of the deal. Mr. Musk completed the deal last month.
More than a year after the 2018 Tesla pay deal was put in place, the company’s stock started climbing sharply, going from about $21 to a peak of about $410 in November 2021. It has since fallen by about 50 percent and now trades at around $190. .
In addition to defending himself, Mr. Musk used his time on the witness stand to hit some of his favorite talking points, including how Tesla single-handedly created the electric car business and why he loathes the Securities and Exchange Commission and investors who bet against the share prices of Tesla.
“Tesla has had an immense impact on the world,” Mr. Musk said in response to a question from a lawyer representing Tesla, Evan Chesler, who appeared designed to show that he had earned his pay. “Not just that Tesla is making electric vehicles, we have been really the main reason why the rest of the car industry has moved toward sustainable, electric vehicles.”
Under questioning by Gregory Varallo, a lawyer representing shareholders, that seemed designed to show that Mr. Musk did not always heed authority, Mr. Musk lashed out at the SEC The commission accused him of securities fraud for claiming in August 2018 that he had “funding secured” to take Tesla private. To settle that case, Mr. Musk stepped down as chairman of Tesla, paid a fine and agreed to have a lawyer vet some of his social media posts about Tesla. In April, a federal judge refused a request by Mr. Musk to end his agreement with the SEC
Mr. Varallo asked a series of questions designed to show that Mr. Musk acts with little oversight from the Tesla board by, for example, deploying the car company’s engineers to help him at Twitter.
“Did someone ever suggest to you that it might not be a good idea to use the resources of a public company for a private company?” Mr. Varallo said.
Mr. Musk replied that the engineers came voluntarily and did the work on their own time. “It was very short term,” he said. “It lasted for a few days, and then it was over.”
Mr. Varallo then asked: “Did any of these so-called independent directors call you and say it might not be a good idea?”
“I don’t believe I received a call,” Mr. Musk responded.
Mr. Musk spoke quietly in response to some questions, giving one-word answers. On other topics, though, he spoke at length.
At one point relatively early in his testimony, Chancellor McCormick expressed frustration with Mr. McCormick. Musk’s digressions, saying: “I’m going to interrupt Mr. Musk, because we can all listen to this all day. It’s very interesting, but I don’t think it was responsive to the question, which I’ve now forgotten.
Mr. Musk’s testimony ended around noon. The trial is expected to wrap up at the end of the week. Chancellor McCormick is expected to rule on the case later, possibly after a few months.