Richard Tornetta, the founder of an automotive audio equipment company, the former drummer for “Dawn of Correction,” and a Tesla investor, is taking the automaker’s CEO and board to court in a case that could see Elon Musk stripped of billions.
Tornetta will have his case heard in a week-long trial in Wilmington, Delaware, starting on Monday, November 14, report Reuters. The case will feature live testimony from Musk, whose compensation package Tornetta argues was wrong.
The plaintiff is suing Musk and the Tesla board on behalf of the company in a shareholder derivative lawsuit. The suit seeks no damages for Tornetta, only to see Musk’s 2018 stock grants rescinded for the benefit of the company. If successful, the move could cost the embattled executive $56 billion in pay.
Read: Elon Musk Sold Nearly $4 Billion Worth Of Tesla Stocks After Buying Twitter
Tornetta held just nine shares in Tesla when he launched his case in 2018, making this an unusual suit. Normally, cases brought by such small investors end quickly with a non-monetary settlement and a payment to the plaintiff’s attorneys.
This time, however, it looks different according to legal experts, who say that such cases are unlikely to be brought by larger investors who fear blowback. Tornetta’s suit has already survived a 2019 motion to dismiss from Tesla, and the plaintiff is not alone in objecting to Musk’s 2018 stock grants.
The package was widely criticized when it was introduced, and the California teacher’s retirement system was among the investors who voted against it. It allows Musk to buy one percent of Tesla’s stock at a deep discount when performance and financial targets are met. So far, Tesla has hit 11 of the 12 targets as its share value has ballooned.
The lawsuit alleges that Musk dictated the pay package’s terms to a board of directors beholden to him. It was then, Tornetta claims, put to a vote of shareholders who were misled about the difficulty reaching the targets set for the company.
Musk and the board of directors, meanwhile, argue that the package kept the CEO focused on Tesla during a difficult period and that the company’s growing value is evidence of that.
