Judge approves Tesla executives’ deal to end excessive pay case

Date:

by Tom Hals

WILMINGTON, Delaware (Reuters) – Tesla (TSLA) executives including Chairwoman Robyn Denholm and James Murdoch received court approval on Wednesday for a settlement price up to $919 million that requires restitution to the automaker to resolve allegations that they themselves overpaid. .

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The settlement requires Tesla executives, including Denholm and Murdoch, to return roughly $277 million in money, $459 million in stock options and hand over $184 million in stock options for 2021-2023. According to the appliance submitted by the shareholder who brought the case, the settlement was not covered by insurance.

Chancellor Kathaleen McCormick, the judge overseeing the case, read her ruling approving the settlement during a telephone hearing Wednesday, according to an attorney for the plaintiffs and the shareholder who opposed the deal.

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“We are very pleased with the chancellor’s decision,” Andrew Dupre, shareholder attorney, told Reuters.

The plaintiff’s legal team said last 12 months’s settlement was the second-largest within the history of the Court of Chancery in Delaware, the principal forum for shareholder disputes.

The directors didn’t admit their mistake.

McCormick also awarded $176 million in fees and costs to three law firms that brought the emergency case.

Tesla asked McCormick to limit the fee to $64 million.

The fee is the fourth largest within the history of shareholder litigation in Delaware.

The company and its lawyer didn’t immediately respond to a request for comment.

The settlement resolves a 2020 lawsuit filed by the Detroit Police and Fire Departments that challenged executive compensation for 2017-2020 as excessive.

Tesla executives received stock options price a whole bunch of thousands and thousands of dollars as the worth of Tesla shares increased 10-fold during this era.

For comparison, the common total compensation for executives at S&P 500 firms can be $327,096 in 2024, according to SpencerStuart, an executive recruiting consulting group.

Musk was not compensated for his role as a Tesla board member.

However, in 2018, a Tesla shareholder filed a separate lawsuit difficult Musk’s $56 billion compensation for serving as Tesla’s CEO. Last 12 months, the identical judge ordered Musk’s pay package invalidated because Musk controlled pay negotiations. One factor the judge considered was the quantity of property the executives owed to Musk or Tesla.

For example, Denholm testified within the case that serving on Tesla’s board netted her about $280 million in profits, which she described as “life-changing wealth.”

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