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By Tom Hals
WILMINGTON, Delaware (Reuters) – Elon Musk faced a significant legal setback this week as a judge stripped him of his $56 billion pay package in a case brought by an unexpected plaintiff, a former heavy metal drummer.
In 2018, Richard Tornetta, who initially held just nine shares of Tesla, filed a lawsuit against Musk. The case eventually went to trial in late 2022, and on Tuesday, a judge ruled in favor of Tornetta, voiding the massive pay deal for being unjust to both him and his fellow Tesla shareholders.
Tornetta was not available for comment, and his attorney declined to provide a statement.
Prior to Tornetta’s case, Musk had been successful in defending against trials accusing him of defamation, breach of duty to shareholders, and violating securities laws.
Based on his online presence, Tornetta seemed to be more interested in creating audio gear for car-customizing enthusiasts than pursuing corporate wrongdoing. He has shared lighthearted videos about gadgets he has invented and mishaps he has encountered, including one where he described how he accidentally torched his eyebrows. Tornetta has also appeared in videos as the drummer for the now-defunct metal band “Dawn of Correction.”
On social media, fans of Tesla and Musk criticized the case as an injustice and speculated about Tornetta’s intentions and political affiliations, questioning how an investor with such a small stake could have such influence on the outcome.
Delaware corporate case law is filled with cases involving individual investors with small shareholdings that have shaped corporate law in the United States.
Many law firms that represent shareholders have a roster of investors to bring cases. They might be pension funds with a diverse stock portfolio, but they are often individual investors like Tornetta. The investors typically sign paperwork to file the lawsuit and then step aside, with the law firm handling the case on a contingency basis.
Tornetta benefits from winning the case in the same way as other Tesla shareholders, by saving the company billions of dollars that a compliant board of directors would have paid to Musk.
While business groups have criticized cases brought by individuals as potentially abusive litigation, experts argue that people like Tornetta are essential for overseeing corporate practices in boardrooms. Lawmakers and judges have encouraged large investment firms to lead such corporate litigation, but fund managers often avoid it to maintain their relationships on Wall Street.
Ultimately, it was up to Tornetta to challenge Musk.
“His name is now etched in the annals of corporate law,” said Eric Talley, a corporate law professor at Columbia Law School. “My students will be reading Tornetta v Musk for the next 10 years.”
(Reporting by Tom Hals in Wilmington, Delaware; Editing by Noeleen Walder and David Gregorio) View comments
Heavy Metal Drummer Bashes Elon Musk Costing Him $56 Billion
Elon Musk, the CEO of Tesla and SpaceX, was recently on the receiving end of criticism from a heavy metal drummer, causing a significant drop in his net worth. The drummer’s remarks took a toll on Musk’s reputation and financial standing, resulting in a staggering $56 billion loss for the tech mogul. The incident has raised questions about the influence and impact of public backlash on high-profile individuals.?
Elon Musk lost a $56 billion pay package in a legal case brought by former heavy metal drummer Richard Tornetta. Tornetta, who held just nine shares of Tesla, sued for unfair treatment of shareholders and won the case, voiding Musk’s pay deal. While Musk has faced previous legal challenges, Tornetta’s case is seen as significant in shaping corporate law. Experts argue that individual investors like Tornetta play a vital role in policing boardrooms, as large investment firms may be reluctant to challenge corporate excesses. Although Tornetta’s case has been criticized by some, it has been seen as a significant victory in corporate law.