Some Tesla executives have been accused of excessive compensation. Now a verdict has been made. The electric car maker’s board of directors has agreed to a settlement worth almost $1 billion.
• Tesla executives accused of overpaying salaries
• Settlement requires repayments in the three-digit million range
• Further measures determined
Directors of electric car pioneer Tesla, including Robyn Denholm, James Murdoch, Elon Musk’s brother Kimbal, Brad Buss, Ira Ehrenpreis, Antonio Gracias, Stephen Jurvetson, Linda Johnson Rice, Kathleen Wilson-Thompson, Hiromichi Mizuno and Oracle co-founder Lawrence Ellison, are said to be joining paid high salaries. Now a settlement has been reached in court after a lawsuit was filed in 2020 by the Police and Fire Retirement System of the City of Detroit.
Excessive compensation for Tesla board members
The accusation: The remuneration of the directors between 2017 and 2020 is disproportionate. The recently announced settlement now requires the directors to pay approximately $919 million in compensation. This makes this one of the largest cases of its kind, as Reuters notes. Around $277 million is to be repaid in cash and $459 million in stock options. The directors must also forgo their 2021 to 2023 stock options worth $184 million.
However, according to Reuters, the board members have not admitted any wrongdoing.
Further measures recorded
The agreement is said not to have specified how much each director must repay, only the total amount. In addition to the payments, other measures were taken. Accordingly, future remuneration packages for directors must be approved by shareholders. In addition, further measures are to be introduced to avoid similar disputes in the future.
“We are very pleased with the Chancellor’s ruling,” Reuters quoted Andrew Dupre, a lawyer for the shareholders, as saying.
Significant comparison
The plaintiffs’ legal costs amount to $176 million, according to Reuters. This means that they are well below the original demand of 230 million US dollars, but at the same time also well above the 64 million US dollars proposed by Tesla. It is said to be the fourth-highest fee in the history of shareholder lawsuits in Delaware.
“This settlement represents a significant step forward for accountability and fairness in corporate compensation practices,” Legal Dive quoted Bleichmar Fonti & Auld, one of the plaintiff’s lawyers, as saying.
Editorial team finanzen.net
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