By Tom Hals
WILMINGTON, Delaware (Reuters) – Tesla (TSLA) directors, including Chairman Robyn Denholm and James Murdoch, won court approval on Wednesday for a settlement worth up to $919 million that requires them to return compensation to the car maker. cars to settle accusations that they paid themselves too much.
The deal requires Tesla board members, including Denholm and Murdoch, to return approximately $277 million in cash, $459 million in stock options and give up 2021-23 stock options worth $184 million. of dollars. The deal was not covered by insurance, according to a court filing from the shareholder who brought the case.
Chancellor Kathaleen McCormick, the judge overseeing the case, read her ruling approving the settlement in a telephone hearing Wednesday, according to a lawyer for the plaintiffs and a shareholder who opposed the deal.
Closing: 4:00:00 pm EST
“We are very pleased with the Chancellor’s ruling,” Andrew Dupre, a lawyer for the shareholders, told Reuters.
The plaintiff’s legal team said last year that the settlement was the second largest ever in the Delaware Court of Chancery, the go-to forum for shareholder litigation.
The directors did not admit to having committed any crime.
McCormick also awarded $176 million in fees and costs to the three law firms that brought the case on a contingency basis.
Tesla had asked McCormick to cap the fee at $64 million.
The fee is the fourth highest in the history of shareholder litigation in Delaware.
The company and its attorney did not immediately respond to a request for comment.
The settlement resolves a 2020 lawsuit filed by the City of Detroit Police and Fire Retirement System that challenged directors’ compensation from 2017 to 2020 as excessive.
Tesla directors received stock options that became worth hundreds of millions of dollars as the value of Tesla shares increased 10-fold during that period.
By comparison, the average total compensation for directors of S&P 500 companies will be $327,096 in 2024, according to SpencerStuart, a consulting group that conducts executive searches.
Musk received no compensation for his role as a member of Tesla’s board of directors.
However, a Tesla shareholder filed a separate lawsuit in 2018 challenging Musk’s $56 billion payout for serving as Tesla CEO. Last year, the same judge ordered Musk’s pay package to be rescinded because Musk controlled salary negotiations. One of the factors the judge considered was the amount of wealth the directors owed to Musk or Tesla.
Denholm, for example, testified in that case that his tenure on Tesla’s board of directors netted him about $280 million, which he described as “life-changing wealth.”