In re cablevision systems corporation options backdating litigation

However, there might well have been at least a colorable basis on which the Dolans might have been able to argue that their million dollar payments would be covered, assuming the typical D&O policy and assuming other potential policy provision did not otherwise preclude coverage.

The language of Section 3.4 appears to represent a deliberate effort to ensure that the Dolans and the other defendants directly bore the cost of their settlement contributions.

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As I noted in a blog post at the time (here), the derivative lawsuit allegations were amended to include allegations against the compensation consultant.We work closely with D&O insurance carriers to keep them advised with respect to such matters.Our D&O Litigation Group, often, leverages our sophisticated shareholder activist, public securities, M&A and capital markets practices to represent clients in litigation and advice arising from proxy disclosures, hostile offers, poison pills, busted or troubled deals, shareholder suits, SEC, exchange or regulatory inquiries, post-closing adjustments, alleged breaches of fiduciary duties, appraisal actions, books and records actions and challenges to corporate governance.The options backdating problems at Cablevision drew a great deal of attention when first disclosed.The company revealed that it had awarded options to a Vice Chairman after his 1999 death, but backdated the options to make it appear that the grant was awarded when he was still alive.We have wide-ranging experience in all types of litigation involving the duties and responsibilities of directors and officers, including D&O litigation in state and federal court, derivative suits, creditor or trustee claims in bankruptcy, shareholder demand letters and Special Committee investigations.We also assist corporations, directors and officers and insurance companies with coverage issues related to directors & officers’ policies.The .5 million increment of the insurance settlement in excess of the million plaintiffs’ counsel’s fee is not explained in the 10-Q.It could be supposed that that .5 million represents a benefit to the corporation (although it could just as easily represent a reimbursement to the company for its own fees incurred in defense of the lawsuit).Nevertheless, the possibility that these provisions might become more commonplace is a concern for corporate officials and their advisors.It remains to be seen whether these types of provisions will be a part of other options backdating settlements, but in light of recent judicial concerns about possible collusive options backdating settlements (refer here), litigants may feel some pressure to show that the settlement was both arms’-length and represents real value.

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