Following a lawsuit alleging they had grossly compensated themselves, Tesla’s Board of Directors struck a $735 million settlement with investors. A lawsuit launched in 2020 accusing the directors, including co-founder Elon Musk, of improperly syphoning off millions of dollars from the company will be dropped with the restoration of the funds to Tesla.
According to the 78-page complaint, which was submitted by the Police and Fire Retirement System of Detroit, “They [the board] have granted themselves millions in excessive compensation and are poised to continue this unrelenting avarice into the indefinite future,” according to a report from Crain’s Detroit Business at the time.
In a court document, it is claimed that between 2017 and 2020, “members of Tesla, Inc.‘s Board of Directors breached their fiduciary duties by awarding themselves excessive and unfair compensation.” The charges were made before a Delaware court earlier this year.
According to a July 14 court filing, the board of directors allegedly utilised their stock options to overpay themselves. All have rejected the allegations, but the lawsuit is being settled “to eliminate the uncertainty, risk, burden, and expense of further litigation,” according to sources.
Tesla’s board of directors was informed to change how remuneration is computed and that they would not earn any compensation in 2021, 2022, or 2023 in addition to receiving back the $735 million.
Larry Ellison, the creator of Oracle Corporation, James Murdoch, the son of media mogul Rubert Murdoch, Elon Musk, and Kimbal Musk are all board members.
Chancellor Kathleen McCormick, who also ordered Musk to complete his $44 billion purchase of Twitter, presided over Musk’s $56 billion trial. She is currently the judge in charge of the board of directors case, and her final approval is required for the settlement to become complete.
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