It is quite lucrative to serve on the board of Tesla, but one of its shareholders has successfully argued that the compensation was excessively high. In a lawsuit, the company’s 12 directors have agreed to return $735 million to Tesla, making it one of the largest shareholder settlements of its kind. The lawsuit, brought by the pension fund for police officers and firefighters in Detroit, accused the directors, which include notable individuals like Larry Ellison, James Murdoch, and Kimbal Musk, of awarding themselves an excessive number of stock options since 2017, displaying a clear case of “unrelenting avarice,” as stated in a report by Quartz. The board, however, admits no wrongdoing, but has settled to avoid further litigation and the associated uncertainty, risk, burden, and expense. It is important to note that this settlement has no impact on a separate lawsuit brought by shareholders who consider Elon Musk’s compensation package of $56 billion as outrageously high, according to CNN.
The board argued that the stock options were justified because Tesla’s performance was exceptional, and they aimed to incentivize the board to maintain this level of success. Nevertheless, the settlement reached does not affect the ongoing lawsuit regarding Musk’s compensation package.
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