Terran Orbital sues former CTO who joined call for leadership shakeup

Terran Orbital sued its former CTO, Austin Williams, a little more than a month after he and other shareholders publicly called for a change in the company’s leadership.

Williams is a co-founder of the satellite design and manufacturing company Tyvak Nano Satellite Systems, which was acquired by Terran Orbital in 2014, and has since become the core of the business. He was one of several senior engineers who quit in November 2022; according to the report from SpaceNews at the time, the three resigned amid ongoing disagreements between the engineering and manufacturing departments over how to meet production targets.

Terran Orbital’s complaint filed on November 13 alleges that Williams did not provide proper notice to terminate his employment contract. The company further alleged that his conduct acted against the best interests of the company and with a lack of good faith, in breach of his fiduciary duty and harmed the company. Williams, the complaint says, “acted with bullying, fraud, and malice.”

The company further said Williams was “aided and abetted” by several unidentified individuals, whom it identified in the suit as “(John) DOES 1-100.” Terran will update the complaint “if the true identity of any DOES be determined,” the suit states.

The charge against Williams comes a little over a month after he and other public investors called on Terran’s Board of Directors to make sweeping changes to the company’s leadership — including installing a new CEO. replace Marc Bell and “reconstitute” the board. The group of investors, who hold approximately 8.4% of the company’s outstanding shares, publicly released their letter to the board called for these changes on October 12. The group declined to comment for this story.

The group, which includes Tyvak’s other cofounders Jordi Puig-Suari and Roland Coelho, said in their letter that the company “operates from a position of weakness due to leadership errors, lack of internal control, poor corporate governance, and loss of public confidence in the market.” They cited a backlog worth $2.6 billion and the company’s dismal stock price – $0.81 today.

The first letter said Williams would “welcome the opportunity to explore” returning to the company if the changes were implemented.

The group sent two more letters; the third letter was sent on November 9, just four days before Terran filed its lawsuit against Williams. In it, they reiterated their request to meet with the board to discuss their proposals, including discussing the CEO candidate identified by the group to replace Bell.

“It is absolutely unacceptable that the Board refused to meet with us and instead decided to adopt a seemingly hostile and unacceptable attitude towards us as shareholders,” the letter said. “We believe such a stance further undermines shareholder value and market confidence in Terran.”

While the lawsuit must be evaluated on its merits, it is not unusual for a company to sue a departing executive a full year later for failing to provide adequate notice. Observers, like other shareholders, may reasonably interpret the company’s actions in this context as retaliation or punishment, regardless of the outcome.

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

Leave a comment