Delaware Supreme Court Reverses $139 Billion Rescission Order, Fully Restoring Elon Musk’s Compensation Package

Quinn Emanuel secured a landmark victory for Elon Musk and the Tesla Board of Directors before the Delaware Supreme Court, reversing a lower court order that had rescinded in full Musk’s compensation package worth $139 billion at the time of the Supreme Court’s decision.

Following a trial before the Delaware Court of Chancery, Chancellor Kathaleen McCormick issued a January 2024 decision rescinding the compensation package, finding deficiencies in the process by which it was approved by Tesla’s board and stockholders in 2018. The Delaware Supreme Court reversed that decision in a 49-page per curiam opinion issued on December 19, 2025, holding that rescission was an improper and inequitable remedy. The court found that it could not “unscramble the egg”—it could not take back six years of work and hundreds of billions in value creation simply because it had concerns about the process that produced the bargain. The court instead awarded the plaintiff, Tesla stockholder Richard Tornetta, only $1 in nominal damages, and dramatically reduced the fee award for plaintiff’s counsel from $345 million—the largest such award in Delaware history—to $54 million.

The case arose out of Tesla’s 2018 stockholder vote approving an unprecedented performance-based compensation plan for Musk. The plan conditioned Musk’s compensation entirely on the achievement of twelve tranches of hyperaggressive operational and market capitalization milestones. Tesla stockholders approved the plan by an overwhelming margin in 2018 and ratified it again in a subsequent vote. Over the following years, Musk satisfied every milestone, driving Tesla’s market capitalization from roughly $50 billion to over $1 trillion. Tornetta, a Tesla stockholder, filed a derivative action in the Delaware Court of Chancery challenging the compensation package on the grounds that the board approval process was flawed and that the stockholder vote was not fully informed.

The Chancery Court agreed and rescinded the package in full. Quinn Emanuel, alongside co-counsel Sullivan & Cromwell, took the appeal to the Delaware Supreme Court. The team argued that rescission was an unconscionable remedy given that Musk had already fully performed under the package and that Tesla and its stockholders had reaped the full benefit of his performance. The Delaware Supreme Court agreed, holding that equity does not permit a court to claw back years of completed performance and destroy a bargain that stockholders themselves had twice endorsed. The decision reaffirms a foundational principle of Delaware corporate law: that courts of equity will not impose disproportionate remedies that punish parties for work already done.

The ruling restores Musk’s options under the compensation package, which at the time of the decision were worth approximately $140 billion. The victory represents a defining moment for Quinn Emanuel’s Delaware practice and for its broader appellate and corporate governance litigation capabilities.