Elon Musk, Larry Ellison, and other current and former Tesla board members agreed to return over $735 million to settle a shareholder lawsuit that alleged Tesla directors "grossly" overpaid themselves. The Tesla directors, who also include Musk's brother Kimbal Musk, further agreed to forego stock options and other compensation for board service in 2021, 2022, and 2023.
"Musk has installed his family and friends on the Company's Board and through them he dominates and exercises control over Tesla and is able to avoid independent oversight of the way he runs the Company," the
2020 lawsuit alleged. "In return, with Musk's blessing and vote as a director, the Director Defendants have consistently paid themselves unfair and lavish compensation" that "grossly exceeds norms for corporate board compensation."
The
settlement filed Friday in Delaware Court of Chancery provides for $458,649,785 in returned options and $276,616,720 in "returned cash and/or returned stock." The money will be returned to Tesla.
The settlement, which is pending court approval, also requires future director compensation packages to be voted on by shareholders. The settlement terms would be in force for five years after they take effect.
The Police and Fire Retirement System of the City of Detroit, a Tesla shareholder, filed the suit as a derivative complaint on behalf of Tesla. The contested stock options were worth $437 million when the complaint was filed in June 2020, but Tesla's stock price has more than quadrupled since then.
arstechnica.com
