Tesla directors, including Chairman Robyn Denholm and James Murdoch, won court approval on Wednesday for a settlement worth up to $919 million that requires them to return compensation to the automaker to resolve the allegations. that they overpaid themselves.
The deal requires Tesla board members, including Denholm and Murdoch, to return about $277 million in cash, $459 million in stock options and forgo stock options for 2021 to 2023 worth $184. million. The settlement was not covered by insurance, according to a court document filed by the shareholder who brought the lawsuit.
Chancellor Kathaleen McCormick, the judge overseeing the case, read her decision approving the settlement in a telephone hearing Wednesday, according to an attorney for the plaintiffs and a shareholder who opposed the settlement.
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“We are very pleased with the judge’s decision,” Andrew Dupre, a lawyer for the shareholders, told Reuters.
The directors did not admit irregularities
McCormick also awarded $176 million in fees and costs to the three law firms that brought the case on a contingency basis.
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Tesla had asked McCormick to cap the fees at $64 million.
The settlement resolves a 2020 lawsuit from the City of Detroit Police and Fire Retirement System, which challenged officers’ compensation from 2017 to 2020 as excessive.
Tesla directors received stock options that became worth hundreds of millions of dollars, as the value of Tesla shares increased tenfold during this period.
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By comparison, the average total compensation for directors of S&P 500 companies was $327,096 in 2024, according to SpencerStuart, a consulting group that conducts executive searches.
Elon Musk has not received compensation for his role as a member of Tesla’s board of directors.
However, a Tesla shareholder filed a separate lawsuit in 2018, challenging Musk’s $56 billion payment for serving as Tesla’s chief executive. Last year, the same judge ordered Musk’s compensation package terminated because Musk controlled compensation negotiations.
