Tesla Directors Settle Lawsuit for Up to $919 Million
Tesla directors, including Chair Robyn Denholm and James Murdoch, have reached a settlement worth up to $919 million to resolve allegations they overpaid themselves. The settlement requires the directors to return roughly $277 million in cash, $459 million in stock options, and to forgo stock options for 2021-23 worth $184 million.
The settlement was approved by Chancellor Kathaleen McCormick of the Delaware Court of Chancery, and does not admit wrongdoing by the directors. The plaintiff’s legal team said the settlement is the second-largest ever in Delaware’s Court of Chancery.
As part of the settlement, the directors will also return compensation they received from 2017 to 2020, which became worth hundreds of millions of dollars as the value of Tesla stock surged 10 times over that period. The average total compensation for directors at S&P 500 companies is $327,096 in 2024.
The settlement also includes governance changes, such as requiring shareholder approval for director compensation. The company and its attorney did not immediately respond to a request for comment.
The lawsuit was brought by the Police and Fire Retirement System of the City of Detroit, which challenged director compensation from 2017 to 2020 as excessive. The directors did not admit wrongdoing, and the settlement does not spell out how much each director has to return, just a collective amount.