Tesla to pay Musk $1m for lawsuit insurance policy
Tesla has said it plans to bring an end to an unusual insurance arrangement with its chief executive, which safeguards its board members against lawsuits, after a final payment of $1m.
Tesla’s chief executive Elon Musk has been personally indemnifying the firm’s board, after he said in April that he believed insurance premiums from other providers were too costly.
Tesla said in a filing to the US Securities and Exchange Commission (SEC) yesterday that it will pay Musk a “one-time fee of $972,361” to cover the next 90 days, after which it will begin a search for conventional liability insurance.
The firm faced backlash from a number of shareholder advisory groups over the policy earlier this year, including one which suggested its chairwoman Robyn Denholm should not be re-elected for allowing it to continue.
Musk’s personal protection of Tesla’s board was intended to last for a one-year period, the carmaker said in April.
However critics argued it permitted the eclectic billionaire too much personal influence over board members.
Musk was removed from his position as chairman of Tesla in 2018 after a dispute with the SEC regarding his use of social media to discuss the company’s financials.
In August of that year he triggered a major rush on its stock after tweeting that he intended to take Tesla private once it reached a value of $420 per share, with “funding secured”.
The board of Tesla was ordered by the SEC to monitor Musk’s social media activity, though he recently appeared to flout those rules after suggesting Tesla’s stock price was “too high” last month.
Tesla’s annual shareholder meeting, which was originally scheduled for 7 July, has now been pushed back due to the coronavirus outbreak. Musk said a new date had not been set, but that it may be “a month or so later”.