A groundbreaking verdict: The Tesla-Board of Directors has approved a settlement of $919 million to resolve allegations of excessive compensation. The case, one of the largest of its kind, highlights the tensions between shareholders and management at a time of rapid growth at Tesla.
The details of the settlement
Repayments and waivers
The agreement provides that the Tesla-Directors:
- $277 million in cash and
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$459 million in stock options in stock options.
They also waive $184 million in share optionsthat were granted between 2021 and 2023.
Persons involved include:
- Robyn Denholm (current CEO),
- Kimbal Musk (brother of Elon Musk),
- James Murdoch, Larry Ellison and other high-ranking members.
The exact repayments of the individuals were not disclosed in the settlement.
Background to the lawsuit
The lawsuit was filed in 2020 by the Police and Fire Retirement System of the City of Detroit filed in 2020. It argued that the directors' compensation between 2017 and 2020 was disproportionate and exceeded reasonable limits, especially given the rapid increase in the Tesla-share price by a factor of ten during this period.
Although none of the directors admitted wrongdoing, the settlement marks a decisive step towards resolving shareholder complaints.
Reforms for more transparency
The settlement includes not only financial repayments, but also important governance reforms:
- Future remuneration packages for directors must be approved by shareholders.
- New measures will be introduced to avoid similar disputes in the future.
These reforms are designed to increase confidence in Tesla's governance practices and ensure that shareholders' interests are more closely aligned.
Legal costs and other developments
The plaintiffs' legal costs amount to $176 million. The original claim of more than $230 million was reduced by the court, but remained significantly higher than the amount claimed by Tesla proposed $64 million.
This judgment follows another decision in which the court rejected the $56 billion pay deal from Elon Musk was declared invalid. Musk has appealed against this decision.
Conclusion
The settlement and the associated reforms mark a turning point for Tesla in terms of corporate governance. The repayments and new control mechanisms show that Tesla efforts to safeguard shareholders' interests more strongly and build long-term trust.
Keywords: Tesla, Tesla Board of Directors, Tesla News, Tesla Governance, Kimbal Musk, Larry Ellison, stock options, settlement Tesla, Tesla Store, Shop4Tesla
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