Tesla Board Returns $735M Following Investor Complaints

The Tesla board of directors has reached a $735 million settlement with investors. The arbitration follows a lawsuit in which the investors accused board members, including co-founder Elon Musk, of improperly draining millions of dollars from the company.

Standard for compensation “far exceeded”

The Detroit City Police and Fire Department Pension Fund filed a lawsuit in 2020. The allegation: The board members are said to have granted themselves generous stock options. The board “far exceeded” the norm for such compensation with 11 million stock options for the period 2017-2020.

Again Crain’s Detroit Business reported, the 78-page complaint, filed with a Delaware court, states: “You [die Vorstandsmitglieder] paid millions in excess compensation and are poised to continue this unrelenting greed indefinitely.”

According to a court filing, “Tesla, Inc. board members violated their fiduciary duties by granting themselves excessive and unfair compensation,” reported Bloomberg.

Acted “in the best interests of Tesla shareholders”.

While the board denied all allegations, they agreed to settle the case “to eliminate the uncertainty, risk, burden and expense of further litigation,” according to a July 14 court filing seen by Bloomberg. In the context of the settlement, however, the Management Board emphasized that the agreement should not be understood as an admission of guilt.

“The board members acted in good faith and in the best interests of Tesla shareholders, but agreed to a settlement to avoid the risk of litigation for themselves and the company,” the board members said, according to court documents.

In addition to returning the $735 million, Tesla’s board of directors also announced that board members, which include Oracle Corp. founder Larry Ellison, James Murdoch, son of media mogul Rupert Murdoch, and Musk himself and his brother Kimbal Musk, would not receive compensation for the years 2021, 2022 and 2023.

The dispute with investors isn’t the only thing Tesla board members have been struggling with lately. Senator Elizabeth Warren has asked the US Securities and Exchange Commission to review the electric vehicle manufacturer.

In a letter to the SEC, Senator Warren has voiced her concerns about Elon Musk’s behavior. In it, she wrote, “Musk’s conduct since his appointment as Twitter CEO, while remaining Tesla CEO, has raised concerns about conflicts of interest, misappropriation of company assets, and other adverse effects on Tesla shareholders.”