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- Tesla paid Elon Musk $3 million to personally insure company directors against legal expenses, a new filing revealed on Wednesday.
- Musk provided up to $100 million “from his personal funds” for the indemnification agreement, which lasted 90 days.
- Tesla announced in April that Musk would personally insure its board members because of “disproportionately high premiums” among insurers.
- The unusual arrangement ended after 90 days, and Tesla now has a more conventional form of insurance.
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Tesla paid its CEO Elon Musk $3 million after the billionaire personally offered up to $100 million in indemnity coverage to company directors, a new filing showed on Wednesday.
Tesla announced in April that Musk would personally insure its board members because of “disproportionately high premiums” quoted by insurance companies for the indemnity coverage. The coverage protects directors from having to pay for their own defense, settlements, or judgments against them, if they face expensive lawsuits.
In Wednesday’s filing, the electric-vehicle company said it entered a 90-day “indemnification agreement” with its founder and CEO in June. Within this agreement, Musk provided up to $100 million “from his personal funds” for indemnity coverage, the filing said.
“In return, we agreed to pay our CEO a total of $3 million which represents the market-based premium … as prorated for 90 days and further discounted by 50%,” the filing said.
Tesla had previous said it would pay Musk at least $1 million for the coverage.
The agreement ended after the 90-day period, and Tesla said it has "instead bound a customary directors' and officers' liability insurance policy with third-party carriers." It didn't specify which carriers had been chosen.
At the same time that the indemnification agreement was made in June, investor adviser PIRC urged Tesla shareholders to vote Musk out as CEO over his $55.8 billion bonus pay package.