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Elon Musk and Tesla board obligated to return US$735 million in shares and cash in lawsuit settlement

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A lawsuit against Tesla's board members over the board's compensation has resulted in a settlement that requires CEO Elon Musk and other board members to repay upwards of US$735 million in stock and cash. The lawsuit, which was levelled against Musk and a multitude of other Tesla board members by the Police and Fire Retirement System of Detroit in 2020, ended in a settlement in order “to eliminate the uncertainty, risk, burden, and expense of further litigation.”

A lawsuit levelled against various Tesla board members over claimed inappropriate and excessive compensation has concluded in a settlement that would see the defendants, among which Elon Musk and his brother, Kimbal Musk, count themselves, return over US$735 million in stock options and cash. The lawsuit was brought against Musk and his fellow board members by the Police and Fire Retirement System of the City of Detroit, a retirement management fund that was filing in its capacity as a Tesla shareholder, according to Bloomberg Law.

The Police and Fire Retirement System of the City of Detroit claimed that the Tesla board members implicated in the lawsuit had started awarding themselves with improper share options starting in 2017 and had not stopped for three years thereafter. The shareholders did not admit to any wrongdoing as part of the settlement, but cited expense, risk, and uncertainty of continued legal proceedings as reasons for settling the suit.

The settlement stipulates that the board members involved will have to return all of their compensation for 2021 to 2023, amounting to US$485.6 million in shares and US$276.6 million in cash, which is a significant amount of money, even split among the twelve defendants in the case. The board will also need to hire an independent compensation consultant to serve in an advisory capacity on board compensation issues.

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Source(s)

Bloomberg Law, Duke University

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> Expert Reviews and News on Laptops, Smartphones and Tech Innovations > News > News Archive > Newsarchive 2023 07 > Elon Musk & Tesla board obligated to return US$735 million in shares in legal case settlement
Julian van der Merwe, 2023-07-18 (Update: 2023-07-18)