Tesla Inc. won a landmark ruling from the Delaware Supreme Court reversing the Delaware Chancery Court and reinstating the 10-year incentive compensation plan for its CEO, Elon Musk. The Supreme Court found that the remedy chosen by the Chancery Court – rescission of Mr. Musk’s 2018 compensation plan – was improper because, among other things, it could not restore Mr. Musk to the same position he was in before the award was granted and would leave Mr. Musk uncompensated for his time and efforts over a period of six years.
The court reinstated the 2018 plan and awarded the plaintiff $1 in nominal damages. It also reduced the fee award for plaintiff’s counsel from $345 million—the largest in Delaware history—to $54 million, the amount Tesla argued for on appeal.
S&C advised Tesla on the 2024 shareholder ratification of the award and its concurrent redomiciliation to Texas. The S&C litigation team, which was brought in for the appeal, included Jeff Wall, who argued the appeal, Brian Frawley, Morgan Ratner and Matthew Schwartz.