Judge Approves Settlement in Tesla Shareholder Case Over Board Compensation
A settlement in a case brought by Tesla shareholders against board members has been officially approved by a judge, resulting in the return of stock, cash, and forfeiture of stock options worth almost $1 billion.
Chancellor Kathaleen McCormick approved the agreement between Tesla and its board members from 2017 to 2020 and the Police and Fire Retirement System of the City of Detroit on behalf of Tesla shareholders. The settlement addresses concerns of excessive compensation received by board members during the specified period.
Shareholders alleged that board members were compensating themselves excessively, with figures amounting to hundreds of millions of dollars, while the average compensation for a board member of an S&P500 company stands at just over $300,000.
As part of the settlement, the board members have agreed to return $277 million in cash, $459 million in stock options, and relinquish $184 million worth of stock options allocated for 2021-2023, totaling nearly $1 billion.
The board members involved include Kimbal Musk, Brad Buss, Ira Ehrenpreis, Antonio Gracias, Stephen Jurvetson, Linda Johnson Rice, Kathleen Wilson-Thompson, Hiromichi Mizuno, and Larry Ellison. Elon Musk, CEO of Tesla, did not receive compensation as part of the board.
While the settlement does not admit to any wrongdoing on the part of Tesla or the board members, Elon Musk himself is facing a similar case regarding his $55 billion CEO compensation package. This package was revoked by the same judge due to lack of good faith in negotiation and presentation to shareholders.
The case involving Musk’s compensation package is now set to be heard by the Delaware Supreme Court. The board members under scrutiny for their compensation were also involved in negotiating Musk’s CEO compensation package.
For more information and updates on this case, please visit the original article on Electrek.
FTC: We use income earning auto affiliate links. More.
