Tesla Directors to Return $919 Million in Settlement Over Alleged Overpayments
A Delaware judge has approved a significant settlement requiring Tesla directors, including notable figures like Chair Robyn Denholm, Oracle founder Larry Ellison, Kimbal Musk, and James Murdoch, to refund up to $919 million to Tesla. This decision resolves allegations that these directors overcompensated themselves, as reported by Reuters.
The settlement stems from a 2020 lawsuit filed by the Police and Fire Retirement System of the City of Detroit, which accused the directors of receiving excessive compensation from 2017 to 2020. According to the terms of the settlement, the directors will return stock and options valued at up to $735 million and forgo three years’ worth of pay, which allegedly amounts to $184 million.
“The settlement marks an important step in holding corporate governance accountable and ensuring fair compensation practices,”
{Chancellor Kathaleen McCormick}
Chancellor Kathaleen McCormick, who presided over the case, also granted $176 million in fees and costs to the three law firms that pursued the case on a contingency basis—meaning they would only receive payment upon winning.
- The lawsuit challenged director compensation as excessive from 2017-2020.
- Directors are set to return stock and options worth up to $735 million.
- They will forgo pay allegedly worth $184 million over three years.
- The law firms involved were awarded $176 million in fees and costs.
Interestingly, Tesla has requested that McCormick cap these legal fees at $64 million. It’s worth noting that Chancellor McCormick previously ruled against a lavish pay package for Tesla CEO Elon Musk despite shareholder efforts to re-ratify the agreement.
