Tesla Directors to Return $919M in Historic Pay Settlement

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Above: James Murdoch departs court in San Francisco, Calif., US, on Feb. 1, 2023. Image copyright: David Paul Morris/Bloomberg/Contributor via Getty Images

The Facts

  • Tesla board members, including Chair Robyn Denholm and James Murdoch, received court approval for a $919M settlement requiring them to return compensation to resolve allegations of excessive pay.

  • The settlement requires the directors to return $277M in cash and $459M in stock options, and forfeit additional options worth $184M for 2021-2023, with none of the settlements covered by insurance.

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The Spin

Narrative A

The compensation packages were justified given Tesla's extraordinary performance, with the stock value increasing tenfold during the period in question, reflecting the directors' contributions to the company's success. Tesla should consider contesting this decision to protect its ability to reward success.

Narrative B

The excessive compensation represented a breach of fiduciary duty, far surpassing industry standards and demonstrating poor corporate governance. It is clear that Tesla's board overpayed itself, and it is only right that the directors are required to return this money.