How A Drummer Got Elon Musk To Pay $56 Billion
via Forbes Breaking News / Youtube
Tesla CEO Elon Musk faced a setback as a judge ruled in favor of Richard Tornetta, a former heavy metal drummer, and pro audio enthusiast, resulting in Musk losing a staggering $56 billion in Tesla compensation. Tornetta, who drummed for the thrash band Dawn of Correction from 2005 to 2009, filed the lawsuit against Musk in 2018, claiming that Tesla’s board of directors had breached their fiduciary duties by approving Musk’s unusually high stock-based compensation plan.
Even though Tornetta held only nine shares in Tesla when he initiated the lawsuit, the legal battle unfolded as part of a shareholder derivative lawsuit.
The lawsuit challenged the approval of Musk’s substantial compensation package, totaling $55.8 billion in 2018, by alleging that the board had not acted in the best interests of the company.
The pivotal decision came from Judge Kathaleen McCormick of Delaware’s Court of Chancery, where Tesla is incorporated. The state’s business-friendly tax laws make it a popular choice for companies to incorporate there.
Musk expressed his discontent on X, stating,
“Never incorporate your company in the state of Delaware,” following the judge’s decision.
He also critiqued the board, saying,
“The compensation committee nor the board acted in the best interests of the company when negotiating Musk’s compensation. There is barely any evidence of negotiations at all,” according to the judge.
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Dawn of Correction, Tornetta’s band from Philadelphia, released their debut album, “Dead Hand Control,” in 2008.
The band disbanded within a year of the album’s release. Tornetta has since become active on social media, showcasing his inventions and designs. Holding a degree in industrial design, he describes himself as a “marketer, inventor, custom fabricator, car guy, family man, and drummer.”
The lawsuit filed by Tornetta went to trial in 2022, with the recent ruling revealing Musk’s loss of the substantial compensation package. Legal experts had predicted this outcome two years ago, but it was only recently confirmed. Delaware corporate case law often sees law firms teaming up with small shareholders to represent the face of a lawsuit against a CEO or board of directors. Although this practice is not as widespread in the state as it used to be, it played a crucial role in Tornetta’s case.
Experts, as per Reuters’ analysis, emphasize the importance of cases like Tornetta’s in holding boardrooms accountable. While Musk has navigated past legal challenges successfully, accusations ranging from breaching duty to shareholders to violating laws and defamation, the recent ruling showcases the significance of such legal actions in ensuring corporate accountability.