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In re cablevision systems corporation options backdating litigation

in re cablevision systems corporation options backdating litigation-31

Mc Guire and former General Counsel and Corporate Secretary David J. Mc Guire paid $30 million and returned stock options representing more than 3 million shares to shareholders, while Lubben paid an additional $500,000 to shareholders.

in re cablevision systems corporation options backdating litigation-34in re cablevision systems corporation options backdating litigation-4in re cablevision systems corporation options backdating litigation-38

Shortly after reaching the $895 million settlement with the company, the remaining defendants, former CEO William W.The plaintiffs’ counsel will seek payment of fees and expenses of no more that $7.116 from the settlement fund.The description of the components of the individuals’ $24.4 million contribution makes for some interesting reading.In Re Money Gram Securities Litigation (NASD: MGI) Delphi Corporation (OTC: DPHIQ) Brocade Communications Systems, Inc. (NASD: ISSI) Salomon Smith Barney - Metromedia Fiber Network, Inc.In addition to these individual contributions, and in what is to me the most interesting part of this settlement, Cablevision Chairman Charles Dolan agreed to make a $1 million cash payment to Cablevision, “to facilitate the resolution of the case.” His son, Chief Executive James Dolan, will also make a $1 million contribution, in addition to returning $366,250 for previously exercised options.

What makes this agreement of the two Dolans to pay $1 million each interesting is Section 3.4 of the Stipulation of Settlement, which provides that the Settling Defendants “will not seek insurance coverage, reimbursement, contribution or indemnification for any of the consideration they provide …from any source, including but not limited to Cablevision, other Settling Defendants, any of the Insurers, or any other Related Person.” The various individual defendants’ returned options exercise proceeds or waived benefits arguably would not have been covered under the typical D&O policy in any event, as it appears to represent the return of compensation to which they were not entitled (coverage for which arguably would be excluded under most policies).

Regardless, plaintiffs faced significant legal hurdles to show loss causation – that the actions of defendants were responsible for causing the stock losses – as well as damages. [y]ou are certainly free to try to change my mind.” A combination of novel legal argument, defendants’ own documents, and testimony did just that.

Determined to find the pressure points that could lead to settlement, plaintiffs pursued two separate discovery matters, which ultimately forced the company’s hand. On June 4, 2008, Magistrate Judge Noel ordered that defendants produce the previously withheld documents to plaintiffs.

According to the Stipulation of Settlement (here), the Cablevision derivative lawsuit was settled for cash payments and other consideration that the parties have represented to the court has an aggregate value of $34.4 million.

Specifically, the parties agreed that Cablevision will received a cash payment of $10 million from its D&O insurer, and “cash payments from and/or relinquishment of value and/or the waiver of specific claims by certain individuals” totaling $24.4 in valued.

On July 1, 2008, California Public Employees’ Retirement System (“Cal PERS”) and Alaska Plumbing and Pipefitting Industry Pension Trust (“Alaska”) announced a settlement with United Health Group Inc.