A judge has formally approved a settlement in a lawsuit filed by Tesla shareholders against board members who will now have to return stock, cash, and forfeit stock options worth nearly $1 billion.
Let me start this article with a quote from Tesla CEO Elon Musk:
Tesla never settles a case when we are right, and never disputes a case when we are wrong.
Today, Chancellor Kathaleen McCormick approved a settlement agreement between Tesla and all of its board members from 2017 to 2020 and the Police and Fire Retirement System of the City of Detroit on behalf of Tesla shareholders for what the shareholders believe is excessive compensation.
The deal was first reported in July 2023, but now it's officially approved and we're learning a few more details.
Shareholders believe that Tesla's board members were overcompensating themselves by hundreds of millions of dollars between 2017 and 2020 when the average compensation of a board member for an S&P500 company is just north of $300,000.
Under this agreement, the board members agree to return to Tesla $ 277 million in cash, $ 459 million in stock options and give up stock options worth $ 184 million granted for 2021-2023.
That adds up to about $1 billion.
Board members include Kimbal Musk, Elon's brother, Brad Buss, Ira Ehrenpreis, Antonio Gracias, Stephen Jurvetson, all of Elon Musk's close friends and people with financial ties to Musk outside of Tesla, Linda Johnson Rice, Kathleen Wilson-Thompson, Hiromichi. Mizuno and Larry Ellison, founder of Oracle Corp and close friend of Musk.
As part of the settlement, neither Tesla nor the board admits any wrongdoing.
Musk did not take compensation as part of the board, but faces a similar lawsuit over his $55 billion CEO compensation package, which was thrown out by that judge after finding it was not discussed or presented to shareholders. good faith.
The board members who received this “excessive compensation” were the ones who “negotiated” Musk's CEO compensation package.
The case is headed to the Delaware Supreme Court, as reported earlier today.
FTC: We use auto affiliate links to earn income. More.