Tesla headed to court Monday to defend the huge compensation package that helped make CEO Elon Musk the richest person on Earth.
Its small SUV, the Model Y, became the best-selling car in Europe recently.
Tornetta argued in his original 2018 complaint that the compensation plan was unnecessary to incentive Musk as he already had a large ownership stake in the automaker. Carla Hayn, a professor who teaches corporate governance at the UCLA business school, told CNN Business that the case is serious for Tesla as it will be a heavy burden for the automaker to prove the compensation and the process to create it was fair.
Institutional Shareholder Services cautioned that the plan"locks in unprecedented high pay opportunities for the next decade," and noted that Musk already owned 22% of Tesla, aligning his interests with it. But shareholders did approve the plan, she noted.Hayn noted that Musk's close relationships with the board members could be problematic for Tesla in the case.
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