By Tom Hals
WILMINGTON, Del. (Reuters) – Tesla (TSLA) directors including Chair Robyn Denholm and James Murdoch got court approval on Wednesday for a settlement price as much as $919 million that requires they return compensation to the carmaker to resolve allegations they overpaid themselves.
The settlement requires Tesla board members including Denholm and Murdoch to return roughly $277 million in money, $459 million in stock options and to forgo stock options for 2021-23 price $184 million. The settlement was not covered by insurance, based on a court filing by the shareholder who brought the case.
Chancellor Kathaleen McCormick, the judge overseeing the case, read her ruling approving the settlement at a telephonic hearing on Wednesday, based on an attorney for the plaintiffs and a shareholder who objected to the deal.
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“We’re more than happy with the chancellor’s ruling,” Andrew Dupre, an attorney for the shareholders, told Reuters.
The plaintiff’s legal team said last 12 months the settlement was the second-largest ever in Delaware’s Court of Chancery, the go-to forum for shareholder litigation.
The administrators didn’t admit wrongdoing.
McCormick also awarded $176 million in fees and costs to the three law firms that brought the case on a contingency basis.
Tesla had asked McCormick to cap the fee at $64 million.
The fee is the fourth-largest within the history of shareholder litigation in Delaware.
The corporate and its attorney didn’t immediately reply to a request for comment.
The settlement resolves a 2020 lawsuit by the Police and Fire Retirement System of the City of Detroit which challenged director compensation from 2017 to 2020 as excessive.
The Tesla directors received stock options that became price a whole bunch of tens of millions of dollars as the worth of Tesla stock surged 10 times over that period.
By comparison, the typical total compensation for directors at S&P 500 firms is $327,096 in 2024, based on SpencerStuart, a consulting group that conducts executive searches.
Musk didn’t receive compensation for his role as a Tesla board member.
Nevertheless, a Tesla shareholder filed a separate lawsuit in 2018 difficult Musk’s $56 billion pay for serving as Tesla’s CEO. Last 12 months, the identical judge ordered Musk’s pay package be rescinded because Musk controlled the pay negotiations. One in every of the aspects the judge considered was the quantity of wealth that directors owed to Musk or Tesla.
Denholm, for instance, testified in that case that her board tenure at Tesla netted her around $280 million, which she described as “life-changing wealth.”