Tesla pays Elon Musk $1m to insure his own board against lawsuits

Olivia Rudgard
Elon Musk

Tesla is paying Elon Musk almost $1m (£810,000) to insure the board of directors against lawsuits for three months. 

The unusual arrangement comes after Tesla disclosed earlier this year that had allowed the chief executive to personally indemnify board members. 

In a filing with regulator the Securities and Exchange Commission, Tesla said it would resume searching for conventional liability insurance but that Mr Musk would continue with this arrangement for another 90 days. 

"In return, Tesla will pay Mr. Musk a one-time fee of $972,361," the company said, adding that the search for a new insurer had been delayed because of the Covid-19 pandemic. 

The insurance issues follow a series of legal claims against the company and its board, including a lawsuit over the acquisition of solar panel company SolarCity, which in January was resolved in a $60m settlement by all the directors other than Mr Musk. 

History of Tesla

In an April update to its annual report from last year, Tesla said it had been unable to find a well-priced quote for the coverage from an insurer.  It said it had decided not to renew its existing policy "due to disproportionately high premiums quoted by insurance companies".

"Instead, Elon Musk agreed with Tesla to personally provide coverage substantially equivalent to such a policy for a one-year period," the company said. 

The decision was controversial among critics of the company, who argued that it was evidence of Mr Musk's inappropriate level of influence over the other members of the board of directors. 

Previously the chairman as well as the chief executive, he was forced to stand down from the former role in a deal with the SEC over a series of tweets about a funding deal which never materialised in 2018.