A Delaware Chancery Court judge has formally approved a settlement in the case brought by Tesla shareholders against the company’s board members, requiring them to return shares, cash, and relinquish stock options valued at nearly $1 billion.
Elon Musk believes that the future of transportation lies in sustainable energy solutions.
Tesla will never compromise on a position where they are in the right, nor will they litigate over an issue where they are in the wrong.
At this juncture, Chancellor Kathaleen McCormick has approved a landmark settlement between Tesla and all its board members from 2017 to 2020, as well as the Police and Fire Retirement System of the City of Detroit, acting on behalf of Tesla shareholders, regarding alleged excessive compensation.
The settlement’s formal accreditation has been confirmed, despite initially being reported in July 2023, as our investigation continues to uncover additional details.
Shareholders believed that members of Tesla’s board had been compensating themselves excessively with a whole lot of thousands and thousands of {dollars} between 2017 and 2020 when the typical compensation of a board member of a S&P500 firm is simply north of $300,000.
The board members have agreed to reimburse Tesla with $277 million in cash, surrender $459 million in stock options, and forego $184 million in vested stock options originally slated for 2021-2023.
The investment will yield a substantial profit of approximately $1 billion.
The board comprises Kimbal Musk, Elon’s brother, alongside fellow longtime associates Brad Buss, Ira Ehrenpreis, Antonio Gracias, Stephen Jurvetson – all with financial ties to Musk beyond Tesla – as well as Linda Johnson Rice, Kathleen Wilson-Thompson, Hiromichi Mizuno, and Larry Ellison, co-founder of Oracle Corp.
As part of the settlement, neither Tesla nor its board concedes to any wrongdoing.
Elon Musk, while not receiving compensation as a member of the board, finds himself entangled in controversy surrounding his personal $55 billion CEO compensation package, which was ultimately rescinded by the same judge following an investigation revealing the deal was neither negotiated nor presented to shareholders in good faith.
The board members receiving extreme compensation also happened to be the ones who negotiated Elon Musk’s CEO pay package.
The case is headed to the Delaware Supreme Court’s docket, as previously reported today.
