Finance

Tesla Directors to Pay $735M in Overcompensation Suit

JUL 18 2023·Updated JUL 19 2023

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The Facts

According to a filing at a Delaware court Monday, Tesla's board of directors will return $735M to settle shareholder claims they overpaid themselves. This excludes CEO Elon Musk's $56B compensation package, which is being challenged in a separate ongoing lawsuit.
guardian
The suit, filed by the Police and Fire Retirement System of Detroit, claims board members used their stock options to “[grant] themselves millions in excessive compensation.”
Gizmodo
The board members also agreed to forfeit all compensation from 2021-2023 – including existing stock options, returning stocks from options that were exercised, and returning cash from stocks that were sold after the options were exercised – totaling $458M in stocks and $276M in cash.
Electrek
Board members had been accused of giving themselves 11M stock options from 2017 to 2020, with the board agreeing to pay back the equivalent value of 3.1M stock options. The board said it acted in good faith and cited unprecedented growth in its defense, though it agreed to settle to avoid further litigation.
TechCrunch
Chancellor Kathleen McCormick — the same judge who oversaw Musk's $56B trial and ordered him to go through with his $44B purchase of Twitter — has final approval of this settlement.
Gizmodo

Sources Split

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RIGHT

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The Spin

Narrative A

It seems like Tesla can't go a day without embroiling itself in a national scandal. The company has been accused of racial bias and corporate corruption, and it’s issued several recalls. It's no surprise that Musk's company was violating ethics standards at the expense of shareholders and consumers.

Time

Narrative B

Musk attracts a lot of hate for Tesla, but it’s the best company in the electric vehicle industry. While working to make good on mistakes it has made, Tesla maintains its post as the maker of the fastest, safest, and most cutting-edge automotive technology in the world.