Home News Tesla directors agree to return $735 million following claims they were massively overpaid

Tesla directors agree to return $735 million following claims they were massively overpaid

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Tesla board compensation lawsuit

Elon Musk, Larry Ellison, and a group of both present and past Tesla board members have agreed to refund $735 million in response to allegations of having excessively compensated themselves, as per a Reuters report. This settlement concludes an ordeal that began in 2020, originating from a lawsuit by a police and firefighter pension fund, contesting stock options allotted to Tesla’s board since 2017. The directors have also decided to forgo their remuneration for the years 2021, 2022, and 2023, and have agreed to revise the method for computing compensation.

The present board of Tesla includes Elon Musk, his sibling Kimbal, James Murdoch from Fox News, Airbnb’s co-founder Joe Gebbia, and Tesla’s ex-CTO JB Straubel. This lawsuit is distinct from another shareholder-filed suit against a $56 billion remuneration package given to CEO Elon Musk.

The Police and Fire Retirement System of Detroit accused the Tesla board of unfairly awarding itself excessive compensation via 11 million stock options from 2017 to 2020. They contended that this vastly exceeded the typical remuneration of a corporate board. The $735 million settlement will be returned to Tesla through what is known as a “derivative lawsuit,” the most substantial such settlement in the history of Delaware’s Court of Chancerty, Reuters reported.

Tesla maintained that stock options were employed to align the directors’ incentives with the interests of the investors. Although Tesla has not yet made a public statement on the matter, court documents revealed that it agreed to the settlement to evade the risk of future legal disputes.

Elon Musk, CEO of Tesla, is contending with another lawsuit defending his $56 billion remuneration package. Richard Tornette, a shareholder, initiated the suit, arguing that Musk received “the most substantial compensation grant in human history,” despite not being completely dedicated to Tesla. Musk received the first of the twelve $700 million payments from this package in 2020.

Frequently Asked Questions (FAQs) about Tesla board compensation lawsuit

Who are the members of the Tesla board involved in the lawsuit?

The members involved include Elon Musk, his brother Kimbal, Larry Ellison, Fox News mogul James Murdoch, Airbnb co-founder Joe Gebbia, and former Tesla CTO JB Straubel.

What is the main claim of the lawsuit against Tesla’s board of directors?

The main claim is that the Tesla board members excessively compensated themselves, specifically through the grant of 11 million stock options between 2017 and 2020.

What is the total amount that Tesla directors agreed to return?

Tesla directors have agreed to return a total of $735 million.

How will the Tesla directors’ compensation be affected in the coming years?

The directors have agreed not to receive compensation for the years 2021, 2022, and 2023, and they have agreed to revise the method for computing their compensation.

Is there another lawsuit that Elon Musk is involved in?

Yes, Elon Musk is involved in a separate lawsuit filed by a shareholder against a $56 billion compensation package that was awarded to him.

What was Tesla’s defense in the lawsuit?

Tesla argued that the stock options were a way to align the directors’ incentives with the investors’ goals.

Who filed the lawsuit against the Tesla board of directors?

The lawsuit was filed by the Police and Fire Retirement System of the City of Detroit.

More about Tesla board compensation lawsuit

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6 comments

JohnDoe123 July 18, 2023 - 4:28 pm

Wow, 735 mill thats a lotta cash to give back. goes to show money ain’t everything, huh?

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TechGirl90 July 18, 2023 - 9:22 pm

wait, so they’ve agreed not to get paid for three whole years? Thats quite a sacrifice, wonder how they’ll manage.

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MuskFan_001 July 18, 2023 - 9:42 pm

Love Musk, but this? Not a great look. Hope he’s learnt his lesson, still rooting for Tesla tho!

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ElectricRideLover July 19, 2023 - 5:53 am

I knew something was fishy with all those stock options. Glad someone’s keeping them in check!

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SharesInvestor102 July 19, 2023 - 6:37 am

this might shake investor confidence a bit, gonna watch the market closely now.

Reply
CarEnthusiast88 July 19, 2023 - 10:01 am

cant believe it! these guys were paying themselves a fortune while we were buying their cars. not cool Tesla, not cool.

Reply

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