Tesla Inc.’s directors to return $735 million to end litigation

Tesla Inc.’s directors have agreedto return $735 million to the company in order to end a litigation. The agreement, which was made public on Monday in a court filing in Delaware, resolves a 2020 lawsuit brought by a retirement fund that owns Tesla stock. The fund had contested the validity of stock options issued to Tesla directors beginning in June 2017.

The $56 billion pay plan for Elon Musk is unaffected by this deal. They payments to Elon Musk is now being investigated in a different lawsuit that went to trial last year. The board of directors, which included Oracle co-founder Larry Ellison, consented to repay the equivalent of 3.1 million Tesla stock options. Directors said that they operated honestly and in the best interests of Tesla shareholders. They decided to settle in order to reduce the danger of future litigation for both themselves and the company. In the case, the directors were charged with unfairly rewarding themselves by receiving excessive salary in the form of over 11 million stock options between 2017 and 2020.

The Police and Fire Retirement System of the City of Detroit started the case in 2020. Along with the financial compensation, the Tesla directors also consented to forego any compensation in the years 2021, 2022, and 2023 and stated that the board’s methodology for deciding compensation will be revised.