We reverse the remedy chosen by the Court of Chancery – rescission of the 2018 compensation plan. We reinstate the 2018 plan and award the Plaintiff nominal damages. We also award the Plaintiff’s counsel fees based on quantum meruit and expenses.
The Supreme Court of Delaware reversed the lower court’s order canceling the 2018 equity award. Although justices differed on liability, they unanimously concluded rescission was an inappropriate remedy.
Revised attorney fees: The prior $345 million fee award was vacated; fees were recalculated based on the reasonable value of the work (hours worked multiplied by four)
Status quo problem: Rescission could not return parties to their original positions because the executive had already expended six years of effort to achieve the plan’s milestones
Existing wealth not a substitute: The Court held that the executive’s existing stock holdings did not constitute consideration for performance under the 2018 agreement
Burden of proof: The Supreme Court placed the burden on the plaintiff to demonstrate a specific alternative remedy, rather than on the directors to propose one
Performance: The plan required very large market-cap and revenue/profit milestones; by January 2023 it was undisputed that the vesting conditions had been satisfied
Summary of the decision
The Supreme Court of Delaware reversed the lower court’s order canceling the 2018 equity award. Although justices differed on liability, they unanimously concluded rescission was an inappropriate remedy.
Final outcome
Plan reinstated: The Court of Chancery’s rescission order was overturned, restoring the 2018 grant and leaving the options intact
Nominal damages: The plaintiff stockholder received $1 in nominal damages because no alternative relief was appropriate once rescission was removed
Revised attorney fees: The prior $345 million fee award was vacated; fees were recalculated based on the reasonable value of the work (hours worked multiplied by four)
Why the decision was reversed
Status quo problem: Rescission could not return parties to their original positions because the executive had already expended six years of effort to achieve the plan’s milestones
Existing wealth not a substitute: The Court held that the executive’s existing stock holdings did not constitute consideration for performance under the 2018 agreement
Burden of proof: The Supreme Court placed the burden on the plaintiff to demonstrate a specific alternative remedy, rather than on the directors to propose one
Background on the 2018 grant
Performance: The plan required very large market-cap and revenue/profit milestones; by January 2023 it was undisputed that the vesting conditions had been satisfied
Stockholder approval: A June 2024 ratification vote showed a majority of disinterested stockholders supported the plan