Richard Tornetta, a thrash metal drummer, has emerged as an unexpected legal adversary against billionaire Elon Musk and his pay package as CEO of Tesla Inc TSLA.
Tiny Investor, Big Impact: Tornetta, one of Tesla’s smallest investors, held merely nine shares when he filed the lawsuit in 2018, according to Reuters. His legal action has led to the Delaware Court of Chancery stripping Musk of his hefty $56 billion pay.
Diverse Ventures and Hobbies: Tornetta is a thrash metal drummer who played at the iconic CBGB club and is part of the now-defunct metal band “Dawn of Correction,” the Reuters report noted.
Shareholder Derivative Lawsuit: Tornetta’s legal battle takes the form of a shareholder derivative lawsuit, where he sued Musk and the Tesla board on behalf of the company. Notably, he is not seeking damages for himself but rather aims to rescind Musk’s 2018 stock grants.
Controversial 2018 Pay Package: Musk’s 2018 pay package involved stock grants tied to operational and financial goals with a maximum value of $55.8 billion. Tornetta argues that shareholders were not adequately informed when they voted on the package.
Financial Success for Musk: Tesla achieved the specified financial goals, contributing to Musk’s ascent as one of the world’s wealthiest individuals. On Tuesday, the Delaware court questioned the necessity of such a pay package for Musk, given his substantial ownership of Tesla stock. When granted the compensation package, Musk owned a 21.9% equity stake in Tesla.
Motivation Behind Lawsuit: The motivation behind Tornetta’s lawsuit remains unclear. While such cases are often criticized as “nuisance suits,” Tornetta’s legal action has persisted for over four years.
Allegations of Board Influence: Tornetta alleges that Musk dictated the terms of the pay package and the timing of the process leading to the approval of the package. The lawsuit claims that Musk had extensive ties with the individuals who negotiated on Tesla’s behalf, including Ira Ehrenpreis, who was the compensation committee chair.
A Second Legal Battle: Tornetta was also a plaintiff in another case challenging the sale of Pandora Media Inc. to Sirius XM Holdings Inc SIRI, indicating his active involvement in legal matters beyond Tesla. Tornetta entered into a settlement in that lawsuit in the latter half of 2023.
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