Tesla directors, including Chair Robyn Denholm and James Murdoch, have reached a court-approved settlement worth up to $919 million to resolve allegations of excessive self-compensation. The settlement mandates the return of approximately $277 million in cash and $459 million in stock options, alongside the forfeiture of stock options valued at $184 million for 2021-2023. The lawsuit, initiated by the Police and Fire Retirement System of the City of Detroit, contested director compensation from 2017 to 2020. The court ruling, issued by Chancellor Kathaleen McCormick, was praised by the plaintiffs’ legal team as the second-largest settlement in Delaware’s Court of Chancery history. Additionally, McCormick awarded $176 million in legal fees to the law firms involved, despite Tesla’s request to limit this to $64 million. The compensation packages of Tesla directors had notably increased with the stock’s value surge during this period. The settlement also mandates governance changes, requiring shareholder approval for future director compensation. Although Elon Musk, who did not draw a salary as a board member, has been embroiled in separate legal issues regarding his CEO pay package, the directors involved did not admit any wrongdoing in the settlement.
