The legal war over Tesla’s board compensation has intensified, with the electric vehicle giant and a shareholder objector filing an appeal against a Delaware Court of Chancery ruling that mandated the return of more than $730 million in stock and options to the company.
The challenge, submitted to the Delaware Supreme Court on Thursday, raises the stakes in a dispute that has already rocked the corporate governance landscape.
A Fight Over “Outrageous” Pay Packages
The lawsuit, originally filed in 2020, accused Tesla’s board of awarding itself staggering compensation packages, including an average of $8.7 million per director in 2018 alone—a sum more than 29 times the average for S&P 500 boards.
To settle the case, Tesla’s board agreed in July 2023 to return more than $730 million in stock, options, and cash, while also forgoing executive pay from 2021 to 2023. The total impact of the deal was estimated at $919 million when governance reforms were factored in.
Despite this resolution, Tesla and shareholder Michael Levin of Illinois have now formally opposed the agreement. Their notices of appeal, filed Thursday, did not include specific legal arguments, but Levin previously criticized the deal, citing a lack of transparency regarding how much each director would be required to return.
