Terran Orbital Sues Former CTO Amid Leadership Shake-Up


Terran Orbital, the satellite design and manufacturing company, has filed a lawsuit against its former Chief Technology Officer (CTO), Austin Williams. This legal action comes slightly over a month after Williams and other shareholders publicly called for a change in the company’s leadership. The lawsuit alleges that Williams did not provide proper advance notice of termination per his employment agreement and that his conduct was against the best interest of the company. Terran Orbital accuses Williams of breaching his fiduciary duty and causing harm to the company through his actions, alleging oppression, fraud, and malice.

Key Takeaway

Terran Orbital is suing its former CTO, Austin Williams, for alleged breach of fiduciary duty and harm caused to the company through his conduct. The lawsuit follows Williams and other shareholders publicly calling for a change in company leadership.

In November 2022, Williams and a group of senior engineers resigned from Terran Orbital amid disagreements between the engineering and manufacturing departments on meeting production targets. Williams, a co-founder of Tyvak Nano Satellite Systems, which was acquired by Terran Orbital in 2014, has become a central figure in the company since the acquisition.

Terran Orbital’s lawsuit not only targets Williams but also mentions unidentified individuals who allegedly aided and abetted him. The company plans to update the lawsuit once the identities of these individuals, referred to as “[John] DOES 1-100,” are ascertained. Williams’s lawyer rejects the claims made against him, stating that the lawsuit has no merit.

Approximately a month before the lawsuit was filed, Williams and other investors, including Tyvak’s co-founders, publicly called on Terran’s Board of Directors to initiate significant changes in the company’s leadership. These changes include replacing CEO Marc Bell and restructuring the board. The group, which holds around 8.4% of the company’s outstanding shares, expressed concerns about leadership missteps, poor governance, and a loss of confidence in the company. They also pointed out a significant backlog of $2.6 billion and a low stock price.

The group sent three letters to the board, the last of which was delivered four days prior to the lawsuit being filed. In these letters, they reiterated their request to meet with the board to discuss their proposals and the CEO candidate they had in mind to replace Bell. However, the board has so far refused the group’s request for a meeting.

While the merits of the lawsuit will be evaluated in due course, the timing and nature of this legal action raise questions about the company’s motivations. It is uncommon for a company to sue a departing executive a full year later for failing to give adequate notice. Observers, including shareholders, may perceive the lawsuit as retaliatory or punitive, regardless of its outcome.

The lawsuit was filed in the Superior Court of California under case number 30-2023-01361218-CU-BC-CJC.

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