The $56 billion pay package given to Tesla chief Elon Musk in 2018 is being challenged in a US court.

A shareholder has petitioned a US judge in an attempt to overturn the award.

The extraordinary payment was deemed to be the most generous when the electric vehicle maker revealed it four years ago and Mr. Musk’s package was linked to performance targets like Tesla’s share price and profitability.

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However, the complaint claims that the firm deceived investors by implying that the goals were tough while they weren’t.

Mr Musk, whose fortune is connected to his Tesla stock, is slated to appear in court on Wednesday, November 16, to defend the payout.

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The case’s conclusion may not be known for several months.

When Tesla announced the 10-year compensation package in 2018, it drew great public attention.

Several shareholder advisory bodies advocated against voting for the proposal, claiming it was excessively generous.

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The sum is revealed to be six times more than the total salary of America’s top 200 CEOs combined in 2021.

Tesla was under pressure and losing funds as it battled to speed up the launch of the Tesla sedan, which was designed to bring the firm to a larger market.

Approval of the pay package, which let the billionaire buy Tesla stock at a massive discount if the firm met targets, was taken as a vote of confidence in him.

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A Tesla board member, Ira Ehrenpreis, said in court the compensation was meant to keep Mr Musk involved at Tesla rather than leaving for other endeavors.

The complaints say the sum was approved by more than 70 percent of Tesla shareholders, albeit many of those stocks belonged to those close to Mr Musk.

The case was filed by Richard Tornetta, a minor stakeholder who runs a business selling car stereo parts.

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He further claims Tesla deceived the public by implying its ambitions were challenging when, in reality, the business expected to meet them all.

The same judge who ruled over Mr Musk’s case against Twitter will preside over the trial.

That legal dispute ended before coming to trial when Mr Musk agreed to take over the social media giant for $44 billion as originally promised.

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Analysts say Mr. Musk has better odds of winning this time.

Boards have broad authority to set pay, yet they face a higher standard if the person in question is a big stakeholder.

The suit says that Tesla’s board was too close to Mr Musk to be deemed independent, as it included the entrepreneur’s friends and his brother.

Source: BBC

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