Elon Musk, Larry Ellison, and other current and former members of Tesla’s board of directors have agreed to return a staggering $735 million in compensation. The payback is part of a settlement ending a shareholder lawsuit that claims the directors were massively overpaid by the electric car company.
Engadget reports that a staggering $735 million will be returned by Elon Musk, Larry Ellison, and other current and former Tesla board members in response to claims that they had received excessively high compensation. The board members’ decision marks the end of a contentious legal battle that began in 2020.
Elon Musk’s Halloween costume (Taylor Hill /Getty)
Tesla burning near Boston (Wakefield Fire Department)
The lawsuit was initiated by a police and firefighter retirement fund, which challenged the stock options granted to Tesla’s board starting in 2017. As part of the settlement, the directors have also agreed to forgo compensation for the years 2021, 2022, and 2023, and to revise the way their compensation is calculated.
The Police and Fire Retirement System of the City of Detroit accused Tesla’s board of granting itself unfair and excessive compensation in the form of 11 million stock options between 2017 and 2020. The $735 million settlement will be paid back to Tesla, marking the largest ever awarded by Delaware’s Court of Chancery in a derivative lawsuit.
In defense of their compensation structure, Tesla argued that the stock options were used to ensure directors’ incentives were aligned with investor goals. While the company has yet to publicly comment on the settlement, court documents reveal that Tesla agreed to the settlement to “eliminate the risk of future litigation.”
This case is separate from another ongoing legal battle involving Tesla’s CEO, Elon Musk. Musk is currently defending a $56 billion compensation package in a lawsuit brought by shareholder Richard Tornette. Tornette claimed that Musk received “the largest compensation grant in human history”, despite not focusing entirely on Tesla. In 2020, Musk received the first of 12 $700 million payments as part of that package.
Read more at Engadget here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan
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