Tesla’s Board Agrees to Return $735 Million in ‘Excessive’ Bonuses: Who Are They?

Tesla's non-employee board members were paid significantly more than their counterparts at similar companies.

Elon Musk and Robyn Denholm.
Tesla CEO Elon Musk and board chairman Robyn Denholm. Getty Images

Tesla (TSLA)’s board of directors have agreed to return $735 million in cash and stock awards to the company, ending a three-year legal battle with a shareholder who accused the electric carmaker’s governing body of unfairly overpaying themselves. The settlement was reached days before Tesla is scheduled to report second-quarter earnings on July 19.

In June 2020, the Police and Fire Retirement System of Detroit, a pension fund, sued Tesla’s board in Delaware, alleging that, between 2017 and 2020, the company’s then-board directors “breached their fiduciary duties by awarding themselves excessive and unfair compensation.”

The number of Tesla’s board directors fluctuated between nine and 11 during those years. In 2017, the company’s eight non-employee directors received a total of $13.3 million in cash and stock awards, according to regulatory filings. In 2018, Tesla added two more non-employee directors and the ten directors received $61 million in compensation. In 2019, the same ten directors were paid over $18 million. And in 2020, nine independent directors were paid nearly $18 million. The amounts are significantly higher than what board directors at similar companies received, a proxy advisor noted in a separate case in 2020.

Tesla’s directors denied all wrongdoings alleged in the Detroit pension fund’s suit, but agreed to settle the case “to eliminate the uncertainty, risk, burden, and expense of further litigation,” according to the July 14 filing in Delaware Chancery Court. Delaware Chancellor Kathaleen McCormick must still approve the deal. McCormick is the judge who oversaw Elon Musk’s $56 billion compensation trial and required Musk to go through with his $44 billion purchase of Twitter last year. In addition to payback, Tesla’s board agreed to forgo their compensation for 2021 through 2023 and hire an independent compensation consultant to advise on director-pay issues.

Tesla board members

The board directors accused in the Detroit pension fund lawsuit included several former members, including Oracle cofounder Larry Ellison, private equity investor Antonio Gracias, venture capitalist Steve Jurvetson, SolarCity CFO Brad Buss, publishing executive Linda Johnson Rice and Hiromichi Mizuno, former chief investment officer of Japan’s Government Pension Investment Fund. Tesla currently has eight board members. The board has formed four committees responsible for audit, disclosure controls, compensation, and nominating and governance. Board chairman Robyn Denholm sits on all four committees, while CEO Elon Musk, his brother Kimbal, and former Tesla CTO JB Straubel don’t sit on any of the committees.

  • Robyn Denholm: board chairperson Robyn Denholm, 59, has been a board director at Tesla since 2014. In 2018, she replaced Elon Musk as board chair. Before that, she was the chief financial officer of Telstra, Australia’s largest telecommunication company.
  • Elon Musk: cofounder, CEO and former board chairman  Elon Musk was both Tesla’s CEO and board chairman from 2010 (the year it went public) to 2018. He agreed to give up the chairman role that year as the result of an SEC investigation into his infamous 2018 tweet of wanting to take Tesla private.
  • Kimbal Musk: Elon Musk’s younger brother Kimbal Musk, 50, is the founder of  The Kitchen Restaurant Group. The restaurant chain has business in Chicago, Memphis, Cleveland and several other U.S. cities. Kimbal Musk is the treasurer for Elon Musk’s private charitable foundation and also serves on the board of his brother’s SpaceX. Like Elon Musk, Kimbal has been a Tesla director since the company’s founding in 2004.
  • Ira Ehrenpreis: venture capitalist Ira Ehrenpreis, 54, is the founder of DBL Partners, a venture capital firm specializing in impact investing. He has been a Tesla board director since 2007 and sits on board’s compensation committee and nominating and governance committee.
  • James Murdoch: son of media mogul Rupert Murdoch James Murdoch, 50, has been a Tesla board member since 2017. He sits on three of Tesla’s four board committees: audit, disclosure controls, and nominating and governance.
  • JB Straubel: cofounder and former CTO of Tesla JB Straubel, 47, worked at Tesla for 15 years as its chief technology officer. He left the company in 2019 to focus on his own battery tech company, Redwood Materials. He was elected by shareholders as Tesla’s newest board director earlier this year.
  • Joe Gebbia: cofounder of Airbnb Joe Gebbia, 41, is Tesla’s youngest board director. He joined the company in 2022. He currently sits on Tesla’s audit committee.
  • Kathleen Wilson-Thompson: former HR chief at Walgreen Kathleen Wilson-Thompson, 65, is a seasoned human resources executive in the manufacturing and health industries. Before her retirement in 2021, she was the chief HR officer at Walgreens. She’s a member of Tesla’s compensation and disclosure controls committees.

Tesla’s Board Agrees to Return $735 Million in ‘Excessive’ Bonuses: Who Are They?