Tesla Directors Agree to Pay $735 Million to Settle Compensation Lawsuit

Tesla Inc.’s board of directors agreed to pay $735 million to settle a shareholder lawsuit accusing them of collecting “outrageous” compensation, according to a Monday filing in the Delaware Chancery court.

Board members, including CEO Elon Musk's brother Kimbal Musk, Oracle Corp. founder Larry Ellison and James Murdoch, son of media mogul Rupert Murdoch, will collectively return the value of 3.1 million stock options to the company, equivalent to $735 million in past compensation, Reuters reported. 

They also agreed to forgo compensation between 2021 and 2023 and to have future compensation packages examined by an independent third party, Law360 reported. The settlement does not impact Elon Musk’s own $56 billion compensation package, which is being challenged by shareholders in another lawsuit that went to trial in 2022, according to Reuters. A ruling is expected soon in that case.

The deal settles a 2020 lawsuit brought on by a pension fund invested in the company. Tesla’s board members used their positions to “enrich themselves at the company’s expense,” the complaint alleged, according to Bloomberg. “They have granted themselves millions in excessive compensation and are poised to continue this unrelenting avarice into the indefinite future.”

The suit accused directors of receiving “outrageous” compensation packages that were valued at an average $8.7 million in 2018 alone — more than 29 times higher than the average for S&P 500 index company boards, according to Law360.