Directors at Tesla set to return $735m after backlash

The directors at Tesla Inc. have agreed to return $735m in total to the company after the claims suggested they overpaid themselves.

According to a filing on Monday in a Delaware court, in order to settle claims of overpaying themselves in what is known as one of the biggest shareholder settlements, directors at Tesla Inc. have come to the conclusion of retuning $753 million to the company.

In the form of approximately 11 million stock options from 2017 to 2020, the directors are alleged to have given themselves unfair and excessive compensation that far exceeded the standards expected of a corporate board.

The agreement ends a lawsuit filed in 2020 by a retirement fund that owns Tesla stock and contested stock options given to Tesla directors beginning in June 2017.

The $56 billion compensation package for Elon Musk, which is being contested by shareholders in a different lawsuit that went to trial last year, is unaffected by the settlement. In the Musk case, a decision is anticipated soon.

In the court of chancery, a significant forum for shareholder litigation, the settlement is one of the largest ever for a derivative case.

The directors also consented to forego compensation in 2021, 2022, and 2023 as part of the settlement, and the board agreed to alter how compensation is determined.

Tesla had argued that it employed stock options to make sure director incentives matched investor objectives.