But Musk ultimately met all but one of the 12 performance and share price high-jumps, sending the company’s valuation to $US1 trillion at one point, although it has since receded to $US575 billion.

The market capitalisation today is 12 times higher than it was four years ago, when the deal was negotiated.

Is ‘vision and tenacity’ grounds for remuneration that is larger than the GDP of any of the world’s smallest 112 countries?

The trouble for Denholm does not necessarily stem from the size of Musk’s remuneration but from the allegations that the board lacked independence from Musk and allowed him to effectively set his own terms.

Musk, the company’s founder, held 22 per cent of the stock when the terms of his remuneration deal was negotiated.

The appointment of Denholm to chair was required as part of a September deal Tesla struck with the securities regulator to settle fraud charges against Musk and Tesla. (It took the SEC rather than the Tesla board to apply some behavioral boundaries to Musk.)

At the time Denholm was appointed chair, legal experts reportedly said it was unclear if Denholm, who has been on Tesla’s board for four years, was independent enough for Tesla to comply with the court-approved settlement.

Denholm joined Tesla as an independent director in 2014, was the head of its audit committee, and was paid almost $US5 million, mainly in stock options in 2017, making her the highest remunerated of its board members.

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Denholm sat on the board when Musk set production targets for the Model 3 car that were not met, and when the chief executive tweeted that he had secured funding to take Tesla private, which prompted the SEC to file fraud charges against him.

During his testimony, Musk initially denied that he essentially negotiated against himself regarding how many shares he would receive in the pay package. To have done so would raise serious question marks about the board’s fiduciary duty.

Lawyers for Richard Tornetta, the owner of eight Tesla shares, who is prosecuting the case, replayed some of Musk’s deposition in which he said at one point regarding the pay package, “that was I guess me negotiating against myself”.

Shareholders generally cannot challenge executive compensation because courts typically defer to the judgment of directors. And in Tesla’s case, there was reportedly broad support from large shareholders for Musk’s pay deal.

But it was a no-lose situation for them. Either Musk wouldn’t meet the ambitious hurdles and wouldn’t get the pay kicker. But if he did, shareholders would share in the company’s prosperity.

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