Corporate Governance

“We’ve entered a new era in American history where corporate reforms can be achieved not only through legislation or federal regulation, but through binding legal agreements.”

– Robert A.G. Monks, corporate governance expert

Robbins Geller is at the forefront of securities fraud prevention. The Firm’s fraud prevention efforts emphasize creating important changes in corporate governance, either as part of the settlements of derivative and class cases or through court orders.

Over the years, Robbins Geller attorneys have been successful in enhancing shareholder value by negotiating governance reforms designed to prevent future securities fraud. Additionally, the Firm works closely with noted corporate governance consultant Robert Monks and his firm, LENS Governance Advisors, to shape corporate governance practices that will benefit investors.

Click the video below to see Robert Monks talk about the importance of corporate governance to investors.

The Firm’s achievements in creating additional corporate governance protections for shareholders include the following cases:

UnitedHealth Group

In re UnitedHealth Grp. Inc. PSLRA Litig., No. 06-CV-1691 (D. Minn.). In the UnitedHealth case, Robbins Geller, on behalf of lead plaintiff CalPERS, obtained sweeping corporate governance improvements, including:

  • the election of a shareholder-nominated member to the company’s board of directors
  • a mandatory holding period for shares acquired by executives via option exercises
  • executive compensation reforms which tie pay to performance. 

Fossil

In re Fossil, Inc. Derivative Litig., No. 06-cv-01672-F (N.D. Tex.). The settlement agreement included the following corporate governance changes:

  • Declassification of elected board members
  • Retirement of three directors and addition of five new independent directors
  • Two-thirds board independence requirements
  • Corporate governance guidelines providing for “Majority Voting” election of directors
  • Lead independent director requirements
  • Revised accounting measurement dates of options

  • Addition of standing finance committee

  • Compensation clawbacks

  • Director compensation standards

  •  Revised stock option plans and grant procedures

  • Limited stock option granting authority, timing, and pricing

  • Enhanced education and training

  •  Audit engagement partner rotation and outside audit firm review

Costco

Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Sinegal, No. 08-cv-01450-TSZ (W.D. Wash.). The parties agreed to settlement terms providing for the following corporate governance changes:

  • Amendment of Costco’s bylaws to provide “Majority Voting” election of directors
  • Elimination of overlapping compensation and audit committee membership on common subject matters
  • Enhanced Dodd-Frank requirements
  • Enhanced internal audit standards and controls, and revised information-sharing procedures
  • Revised compensation policies and procedures
  • Revised stock option plans and grant procedures
  • Limited stock option granting authority, timing, and pricing
  • Enhanced ethics compliance standards and training

F5 Networks

In re F5 Networks, Inc. Derivative Litig., No. C-06-0794-RSL (W.D. Wash.). The parties agreed to the following corporate governance changes as part of the settlement:

  • Revised stock option plans and grant procedures
  • Limited stock option granting authority, timing, and pricing
  • “Majority voting” election of directors
  • Lead independent director requirements
  • Director independence standards
  • Elimination of director perquisites
  • Revised compensation practices

TXU Energy

Schwartz v. TXU Corp., No. 3:02-CV-2243-K (N.D. Tex.). The parties’ settlement included the following corporate governance changes:

  • Director stock ownership requirements
  • Addition of two new independent directors
  • Lead independent director requirements
  • Enhanced independence standards
  • Appointment of corporate governance officer
  • Enhanced CFO independence

Ashland

Central Laborers' Pension Fund v. Chellgren, No. 02-CI-02174 (Ky. Cir. Ct., Kenton Cnty.). The parties’ settlement included the following corporate governance changes:

  • Shareholder-nominated director
  • Lead independent director requirements
  • Mandatory director retirement age
  • Enhanced director independence
  • 2/3 of board must be independent
  • Minimum director stock ownership requirements
  • Stock option provisions
  • Trading controls

Hanover Compressor

Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Hanover Compressor Co., No. H-02-0410 (S.D. Tex.). As part of the settlement Robbins Geller obtained groundbreaking corporate governance changes, including:

  • Direct shareholder nomination of two directors
  • Mandatory rotation of the outside audit firm
  • Two-thirds of the board required to be independent
  • Audit and other key committees to be filled only by independent directors
  • Creation and appointment of lead independent director with authority to call board meetings

Sprint

In re Sprint S’holder Litig., No. 00-CV-230077 (Mo. Cir. Ct., Jackson Cnty.). In connection with Robbins Geller’s settlement of a derivative action involving Sprint Corporation, the company adopted over 60 new corporate governance provisions which, among other things:

  • Established a truly independent board of directors and narrowly defines “independence” to eliminate cronyism between the board and top executives
  • Required outside board directors to meet at least twice a year without management present
  • Created an independent director who will hold the authority to set the agenda, a power previously reserved for the CEO
  • Imposed new rules to prevent directors and officers from vesting their stock on an accelerated basis

E*Trade

Barry v. E*Trade Grp., Inc., No. CIV419804 (Cal. Super. Ct., San Mateo Cnty.). In connection with settlement of a derivative suit the following changes were implemented:

  • Excessive compensation of CEO was eliminated:
    • Reduced salary from $800,000 to zero
    • Bonuses reduced and to be repaid if company restates earnings
    • Reduction of stock option grant and elimination of future stock option grants
  • Important governance enhancements obtained, including the appointment of a new unaffiliated outside director as chair of board’s compensation committee

Occidental Petroleum

Teachers’ Ret. System of Louisiana v. Occidental Petroleum Corp., No. BC185009 (Cal. Super. Ct., Los Angeles Cnty.). As part of the settlement, corporate governance changes were made to the composition of the company’s board of directors, the company’s Nominating Committee, Compensation Committee and Audit Committee.

 

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