By Tom Hals
WILMINGTON, Del. (Reuters) – Tesla (TSLA) executives, including Chairman Robyn Denholm and James Murdoch, won court approval on Wednesday for a settlement worth up to $919 million that will require them to pay back damages to the automaker to resolve allegations to resolve that they themselves have paid too much.
The settlement requires Tesla board members, including Denholm and Murdoch, to return approximately $277 million in cash and $459 million in stock options and to forgo 2021-2023 stock options worth $184 million. The settlement was not covered by insurance, according to a report from the shareholder who filed the case.
Chancellor Kathaleen McCormick, the judge overseeing the case, read her ruling approving the settlement during a telephone hearing Wednesday, according to an attorney for the plaintiffs and a shareholder who objected to the deal.
Closing: January 8 at 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 Court of Chancery in Delaware, the forum of choice for shareholder disputes.
The directors admitted no wrongdoing.
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 limit the compensation to $64 million.
The award 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 by the City of Detroit Police and Fire Retirement System, which found executive pay from 2017 to 2020 to be excessive.
The Tesla directors received stock options that became worth hundreds of millions of dollars as the value of Tesla stock rose tenfold during that period.
By comparison, the average total executive compensation at S&P 500 companies will be $327,096 in 2024, according to SpencerStuart, an executive search consulting group.
Musk received no compensation for his role as a Tesla board member.
However, a Tesla shareholder filed a separate lawsuit in 2018 challenging Musk’s $56 billion compensation for serving as Tesla CEO. Last year, the same judge ordered Musk’s pay package to be withdrawn because Musk controlled pay negotiations. One of the factors the judge took into account was the amount of wealth that directors owed to Musk or Tesla.
For example, Denholm testified in that case that her tenure at Tesla earned her about $280 million, which she described as “life-changing wealth.”