Title: Tesla Directors to Return $735 Million to Settle Investor Lawsuit
Subtitle: Corporate-governance changes to tackle board-level compensation issues
Date: [Insert Date]
The directors of Tesla, led by CEO Elon Musk, have agreed to return a staggering $735 million in stock awards and cash in order to settle an investor lawsuit, according to a recent announcement. The move comes as part of an effort to address allegations of excessive compensation and improper awards made to the company’s board members.
The settlement, which includes prominent directors Larry Ellison and James Murdoch, entails the surrender of stock grants and cash for previously exercised options. While the board members deny any wrongdoing, the decision to settle was made in order to avoid protracted litigation.
This settlement is contingent upon the approval of the Delaware Chancery Court Chief Judge, adding an additional layer of scrutiny to the resolution. Interestingly, the same judge is also presiding over another case filed by a Tesla shareholder, concerning a whopping $55 billion executive-compensation plan for Elon Musk.
The original lawsuit alleged that Tesla directors had been improperly rewarding themselves with excessive compensation since 2017. The revelations during the legal proceedings shed light on the astonishing figures involved. In 2018 alone, non-employee directors received stock grants worth over $8.7 million, making the board chairperson the second-highest-paid in the entire United States.
As part of the settlement, Tesla board members are required to return stock or cash and forgo any compensation as directors for both 2021 and this year. Furthermore, the company has committed to implementing corporate-governance changes in order to thoroughly review board-level compensation issues and prevent similar controversies from arising in the future.
To provide independent and expert advice on such matters, Tesla will engage the services of an independent compensation consultant. This move is expected to bring more transparency and fairness in decision-making processes regarding director pay.
In terms of value, the total stock shares to be returned amount to a staggering $458,649,785, with an additional $276,616,720 in cash, making it a significant financial adjustment for the company.
The case, titled The Police and Fire Retirement System of Detroit v. Musk, is currently being heard in the Delaware Chancery Court, highlighting the significance and attention this legal action has garnered.
Tesla’s decision to settle this investor lawsuit serves as a testament to the company’s commitment to addressing concerns and maintaining ethical corporate practices. With the implementation of corporate-governance changes and the hiring of an independent compensation consultant, the hope is that such controversies will be effectively prevented moving forward.
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