As speculation swirls that Tesla’s board is cooling on its chief executive, Elon Musk, the billionaire businessman’s pay package — which the board played a pivotal role in approving and defending — hangs in the balance. 

Mr. Musk’s future at the electric vehicle company was cast into doubt this week when the Wall Street Journal reported that Tesla’s board, irked with Mr. Musk’s involvement in the White House and concerned with the company’s tumbling stock price, had begun to look for a new chief executive. 

Yet the board’s chairwoman, Robyn Denholm, quickly denounced the report on X early Thursday morning as “absolutely false” and affirmed that the board remains “highly confident” in Mr. Musk’s “ability to continue executing on the exciting growth plan ahead.” 

Mr. Musk followed up with his own scathing rebuke, accusing the Journal of an “EXTREMELY BAD BREACH OF ETHICS” in publishing a “DELIBERATELY FALSE ARTICLE” without including the “unequivocal denial beforehand by the Tesla board of directors.” 

It thus appears that, at least for now, Mr. Musk’s position at Tesla is in the clear. Yet the possibility that the board is wavering in its support for the eclectic chief executive could knock Mr. Musk on his back foot as he fights to reinstate his record-breaking pay package. The board, which approved an executive compensation plan that awarded Mr. Musk stock options based on milestone achievement, has been a crucial player in defending the pay package in court. 

The legal saga dates back to 2018, when Mr. Musk’s compensation — which, at the time, hovered around $50 billion — was challenged in a suit brought by Tesla shareholders. They claimed that the board misled them into believe that the performance goals were more difficult to achieve than they actually were, and thus had failed to uphold their fiduciary duty of operating in the best interest of shareholders. 

They also argued that many members of Tesla’s board — including Mr. Musk’s brother, Kimbal Musk, and James Murdoch, who is the son of press tycoon Rupert Murdoch and formerly a close friend of Mr. Musk — lacked the independence to decide fairly due to their close personal relationships with the Tesla chief executive.  

Mr. Musk was dealt his first blow when the Delaware Chancery Court chancellor, Kathaleen McCormick, ruled in favor of the plaintiffs, concluding that the process leading up to the plan’s approval was “deeply flawed.”

Undeterred, the Tesla chief executive then turned around and asked Tesla’s shareholders — from individual investors to billion-dollar Wall Street firms — to voice whether he was deserving of the behemoth pay package. 

Tesla’s board backed Mr. Musk’s bid, relaying to shareholders that retaining Mr. Musk’s “attention” and “focus” is a top priority and that the stock option pay package will “only serve to incentivize him to continue delivering value to Tesla and our stockholders.”

Tesla’s investors voted in support of Mr. Musk’s compensation plan with a 72 percent majority. Judge McCormick, though, upheld her previous ruling, stating that a shareholder voter cannot simply “revise” a legal judgement. 

In March, Mr. Musk filed an appeal against Judge McCormick’s ruling and brought the legal dispute to the Delaware supreme court. Mr. Musk and Tesla argued in their appeal that Ms. McCormick erred in concluding that Mr. Musk had the upper hand during compensation negotiations given that “Musk owned less than a quarter of Tesla’s stock, had no power to dictate terms to the board, and did nothing to dominate or coerce the directors during the transaction.” They further insisted that investors benefited from his “motivated and exceptional leadership.” 

It’s not clear whether Tesla’s shareholders would choose to ratify Mr. Musk’s compensation plan if given the opportunity to vote today. Mr. Musk’s foray into American politics has not been without controversy and Tesla has found itself caught in the crossfire. Roiled by international boycotts and acts of vandalism, Tesla’s sales, and stock price, have suffered. 

Amid the turmoil, several of Tesla’s board members have offloaded their stakes in the company. In March, James Murdoch cashed in on $13.2 million worth of Tesla shares, joining fellow board members Robyn Denholm and Kimbal Musk — Elon’s brother — in shedding their holdings in the electric vehicle company.

Last week, Mr. Musk, perhaps beginning to feel the heat, told investors that he would cut back on his time at the White House and focus his attention on running Tesla.