Last week, Elon Musk suffered one of the biggest losses in US Justice Department history. Tesla's chief executive was deprived of 5 thousand 6 billion dollars in salary at this time. However, no one at his level did the case due to which he had to give up that amount of money. A former heavy metal drummer did.
Richard Tornetta filed the lawsuit against Elon Musk in 2018. At that time, this resident of Pennsylvania had only 9 shares of Tesla. The case finally went to trial in 2022. The judge's ruling on Tuesday was in favor of Richard Tornetta. Elon Musk's huge paycheck for himself was overturned by the court, saying it did not treat Tornetta and shareholders like him fairly.
Reuters could not reach Richard Tornetta for comment. And his lawyer refused to comment on the matter.
Tornetta's case was preceded by several lawsuits against Elon Musk, accusing him of defamation, breach of duty to shareholders and violation of stock market laws. But the mask survived in all those cases.
What's revealed about Richard Tornetta online is that as much as he likes to build music equipment for car enthusiasts, he's not as interested in fighting corporate malfeasance. He posted videos of the machines he made online. He also gave a video of how he burned his eyebrows.
There is a video online of Richard Tornetta playing drums with his defunct band 'Dawn of Correction' at New York's CBGB club.
Fans of Tesla and Musk on social media, however, are describing the verdict in the case as a farce in the name of justice. They also discuss Torneta's motives and political connections. Questions have also been raised as to how he acquired so much power with so few shares.
Salary of mask
The judgment came from the Court of Chancery of the State of Delaware. Elon Musk's salary settlement with Tesla's board of directors in 2018 was a record. The judge canceled the $5,600 million salary agreement. In his words, the 'abysmal amount' is unfair to shareholders.
Elon Musk isn't just Tesla's CEO. He also heads several other companies, including social media giant X and aerospace company SpaceX. Apart from this, there is the Boring Company for digging tunnels in the ground, the artificial intelligence company XAI and the talked about company Neuralink. The latter company implanted a chip in the human brain last week, which aims to connect the human brain with a computer.
Elon Musk was given the largest pay package in American corporate history by members of Tesla's board of directors who want to keep the billionaire happy, a Delaware state court said.
As part of the settlement, Elon Musk was granted options for 304 million shares in 2018, which he can buy at $23.33. On Tuesday, Tesla was trading at $191.50 a share. That is, he got the opportunity to buy Tesla shares at a much lower price than the market price thanks to the board of directors.
When Elon Musk was granted the share option, Tesla was valued at $5 trillion. In 2021, the value of this company stands at 1 lakh crore dollars.
Musk wants to increase his number of shares in Tesla. He recently said he wants to raise shares to prevent outsiders from taking control of Tesla. He has also given his proposal in this regard to the board of directors.
In a post on X, he wrote, "I'm uncomfortable with Tesla taking leadership in AI and robotics without 25 percent voting control." I have influence, but no power to change any decisions. If not, I'd much rather make a product outside of Tesla."
Analysts believe that the case of Richard Tornetta can shake the American corporate world. Columbia Law School professor Eric Talley said many law firms work with multiple investors so they can bring new cases. Among these investors are institutions such as pension funds, but also individuals such as Torneta.
Eric Talley said, these investors end their responsibility by signing the case papers. They don't give any money to legal institutions. These institutions later prosecuted themselves. As in the case of Elon Musk.
But investors like Richard Tornetta benefited, saving the company hundreds of millions of dollars. As much as Tornetta gained, the rest of the shareholders benefited equally. In the case of Tesla, a kneeling board of directors gave Elon Musk hundreds of millions of dollars, money that now survives.
Experts believe that a company needs people like Tornetta to oversee the board. Lawmakers and judges have long wanted investment companies to take the lead. But experts say fund managers don't want to do that because it could strain their relationship with Wall Street.
And that's why people like Richard Tornetta have to stand up against Elon Musk.
Eric Talley said, 'His name will now be etched in the history of corporate law. "My students will be reading Tornetta v. Musk for the next 10 years."
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