Richard Tornetta vs. Tesla and the Boring Company: A Case Study in High-Dimensional Wall-Building

According to a complaint filed by Richard Tornetta, Musk exploited his control over the company and its board of directors in order to fund his personal ambition to colonize Mars.

Musk was sharing his time between his many other projects. SpaceX began regularly sending astronauts to the International Space Station. The Boring Company built a Loop under the Las Vegas Convention Center. And then he bought a account with a name that he did not know.

The case could be significant for the company because of the questions raised about its executive compensation. Tesla’s board of directors has defended the compensation package.

Amazon CEO Andy Jassy, for example, received compensation valued at $212.7 million in 2021. Apple CEO Tim Cook received nearly $100 million last year. Microsoft CEO Satya Nadella was paid over 50 million dollars.

The plan, originally set to pay out over the course of a decade, turned out to be wildly lucrative for Musk and in astonishing time. Tesla was the best performing US stock in 2020 and became America’s most valuable automaker ever. Its small SUV, the Model Y, became the best-selling car in Europe recently.

The compensation plan was not necessary because Musk already owned a large portion of the company, argued Tornetta in his original complaint.

The lawsuit was certified as a class action case by the court. The case has taken years to move through the system due to the drawn-out nature of litigation, including working through a motion from Tesla to dismiss the complaint.

She noted that Institutional Shareholder Services and Glass Lewis, advisory firms, both recommended in 2018 that Tesla stockholders reject the compensation plan.

“Given that that entire board is very much under the influence of Musk it’s hard to know that anything that they did would be following proper process,” she said.

Eleven Days in a Trial: Musk at the Delaware Court of Chancery and in the SolarCity Trial, Case in General Relativity

The trial is expected to last a week. Chancery court judges at times rule from the bench, but that’s uncommon. It may take weeks to months before a decision is issued.

Musk has become regular at the Delaware Court of Chancery. He was in court last month for his acquisition of Twitter. He testified last year in the dispute over SolarCity. A judge ruled in Musk’s favor this April.