The Good, Bad & Ugly ~ Unethical Behavior, Board of Directors, Settlement, and Prioritizing Public Representation!

Elon Musk, the CEO of Tesla Inc., along with other board members, has agreed to a settlement of over $735 million in response to allegations that they unjustly awarded themselves exorbitant compensation packages. Court documents reveal that the board, which included prominent figures like Larry Ellison, founder of Oracle Corporation, James Murdoch, son of media mogul Rupert Murdoch, and Kimbal Musk, pledged to transfer stock grants and cash while also committing to revise corporate governance procedures related to board-level compensation evaluations.

The July 14 filing in Delaware Chancery Court acknowledges the board members’ misconduct but states their willingness to settle the matter “to eliminate the uncertainty, risk, burden, and cost of further litigation.” Tesla has not responded to requests for comment as of Monday. The dispute was initiated by a Michigan-based pension fund against the carmaker’s board in 2020.

To solidify the settlement, Judge Kathaleen St. J. McCormick of Delaware Chancery Court must grant her approval. However, she is also tasked with presiding over another case involving a Tesla investor challenging a $55 billion executive compensation plan for Elon Musk. The lawsuit alleges that the approval process for this plan, the largest in US corporate history, was marred by unfair circumstances and hasty decisions regarding performance benchmarks.