California Superior Court

Grant & Eisenhofer represented the Teachers’ Retirement System of Louisiana as lead plaintiff in a class and derivative action against Siebel Systems. Following a hard-fought and acrimonious litigation, Grant & Eisenhofer successfully negotiated a settlement that included numerous corporate governance reforms in addition to the cancellation of 26 million management stock options with a value of over $56 million. The company agreed to restructure its compensation committee, disclose more information regarding compensation policies, audit its option plans as part of the company’s annual audit through an outside auditor, and limit directors’ compensation. The Siebel Systems settlement generated significant favorable press in the industry, as investors and compensation experts anticipated that the reforms adopted by Siebel Systems could affect how other companies deal with compensation issues.

Delaware Chancery Court

G&E represented the Service Employees International Union (SEIU) in successfully preventing the company from structuring an annual meeting that would have improperly restricted the ability shareholders to present matters for consideration and nominate board candidates.

Delaware Chancery Court

Grant & Eisenhofer represented the Teachers’ Retirement System of Louisiana as lead plaintiff in a class and derivative action against HealthSouth Corporation seeking an order to force the HealthSouth board of directors to hold an annual shareholder meeting to elect a new board. As a result of the negotiated settlement, five of the defendant directors agreed to resign and be replaced by directors selected by a committee comprised in part by the Teachers’ Retirement System of Louisiana and other representatives of large institutional investors of HealthSouth.

Southern District of New York

Grant & Eisenhofer represented the American Federation of State, County & Municipal Employees (AFSCME) in litigation against insurance giant American International Group, Inc. (AIG). AFSCME was seeking to compel AIG to include a proxy access proposal in the company’s proxy statement pursuant to SEC Rule 14a-8. Long considered a primary goal of corporate governance reform, proxy access would require corporations to publish the names of director candidates nominated by shareholders in the corporation’s proxy statement.

The Second Circuit’s decision in favor of AFSCME in this case reversed several years of No Action Letters from the Securities and Exchange Commission’s Division of Corporation Finance that had effectively prevented shareholders from installing proxy access regimes at their corporations. This decision renewed the debate on the merits of proxy access that had stagnated following the Securities and Exchange Commission’s failure to adopt a mandatory rule in 2004 and confirmed that shareholders have an existing right under the federal securities laws to propose bylaw amendments to require their companies to publish the names of shareholder-nominated candidates.

District of Minnesota

Grant & Eisenhofer represents the Ohio Public Employees Retirement System, State Teachers Retirement System of Ohio, and Connecticut Retirement Plans and Trust Funds as lead plaintiffs in a derivative and class action suit involving breach of fiduciary duty and challenging the company’s practice of options backdating. In this case, the plaintiffs allege that the UnitedHealth board intentionally violated the terms of shareholder-approved stock option plans and engaged in a fraudulent scheme to backdate options with the intent to provide the company’s senior executives with billions of dollars in windfall compensation. Having already successfully achieved reforms in connection with certain options granted to the former CEO of the company, G&E has worked closely with a Special Litigation Committee appointed by the company in negotiating settlements which, if approved, would return over $900 million to UnitedHealth. This recovery would represent the largest settlement in the history of derivative litigation in any jurisdiction.

Delaware Chancery Court

Grant & Eisenhofer represents Michigan-based institutional investor Sterling Heights Police & Fire Retirement System in a class action against Mattel on behalf of Mattel shareholders, alleging that the company issued false and misleading financial reports to investors after consistently refusing to abide by federally mandated guidelines governing disclosure of product safety issues that came to light following Mattel’s recalls of the company’s toys.

Delaware Chancery Court

Grant & Eisenhofer represented institutional shareholders, led by the Louisiana Municipal Employees’ Retirement System (LAMPERS), challenging the merger agreement between Chicago Board of Trade (CBOT) and the Chicago Mercantile Exchange (CME). After extensive and greatly compressed discovery, Grant & Eisenhofer was able to negotiate important changes to the announced transactions that resulted in significantly more compensation paid to the shareholders of the acquired corporation. The CBOT/CME merger provided CBOT shareholders with an additional $485 million.

Delaware Chancery Court

G&E represented Amalgamated Bank in a lawsuit involving the timing of stock option grants and breach of fiduciary duty at Tyson Foods. G&E obtained historic rulings from the Delaware Chancery Court, clarifying the fiduciary duties of corporate directors in connection with the administration of stock option plans, negotiating a $4.5 million cash settlement and requiring the company to install significant reforms in the nomination and appointment of directors. This settlement provided necessary limitation on transactions between the company and members of the Tyson family.

Delaware Chancery Court

In a case followed closely by corporate governance experts, Grant & Eisenhofer won a huge governance settlement with media giant News Corp. regarding the contested extension of the company’s anti-takeover “poison pill” defense, written to defend against a takeover bid by Liberty Media. G&E represented a group of international institutional investors from Australia, the United States, the United Kingdom and The Netherlands. Two weeks before trial would have begun in the Delaware Chancery Court and just prior to deposition by News Week chairman and majority owner, Rupert Murdoch, the company agreed to put the controversial extension of a poison pill defense provision to full shareholder vote at its next annual meeting. The outcome has been widely hailed as a milestone in corporate governance reform.

Delaware Chancery Court

Grant & Eisenhofer represented renowned corporate governance expert Professor Lucian Bebchuk of the Harvard Law School in this action seeking to establish that shareholder-adopted bylaws that limit a board’s ability to adopt or implement a “poison pill” rights plan are legal under Delaware law.

The shareholders’ right to adopt and amend corporate bylaws is enshrined in Delaware law. Yet for many years, corporate boards have sought to limit this right by arguing the directors’ statutory obligation to manage the day-to-day affairs of a corporation somehow restrict the shareholders’ rights to amend bylaws in areas that directors considered to be within their business judgment. A board’s ability to adopt a “poison pill” rights plan is one such area. In early 2006, Prof. Bebchuk introduced a shareholder proposal to be considered by the shareholders of CA Inc. at that company’s 2006 annual meeting that would have placed restrictions on the CA board’s ability to adopt and implement a shareholders’ rights plan. CA, in turn, stated that it intended to exclude the proposal from the company’s 2006 proxy materials on the grounds that the bylaw was illegal under Delaware law.

In this litigation, before the Delaware Court of Chancery, Prof. Bebchuk sought a declaratory judgment that his proposed bylaw was legal under Delaware law. Although in the factual context of the litigation, the Court held that Prof. Bebchuk’s specific request for a declaratory judgment was not ripe, the Court’s decision made clear that bylaws enacted by shareholders that may restrict a board’s ability to adopt and implement a “poison pill” plan are not necessarily illegal under Delaware law.

The Court’s decision in this case is noteworthy because it specifically rejected the company’s argument that the bylaw was plainly illegal, and thus rejected the very argument upon which corporate boards have relied for years to exclude important shareholder proposals from corporate proxy statements.

Delaware Chancery Court

Grant & Eisenhofer represents the Louisiana Municipal Police Employees’ Retirement System (LAMPERS), an institutional shareholder of Countrywide Financial Corporation, seeking access to books and records to determine why stock options were repeatedly issued to executives just prior to large stock price increases. Countrywide was ordered to turn over internal records to LAMPERS for further review regarding corporate misconduct.

Delaware Chancery Court

Grant & Eisenhofer represented two institutional shareholders in this derivative litigation challenging the conduct of the board of directors of Caremark Rx Inc. in connection with the negotiation and execution of a merger agreement with CVS, Inc., as well as the board’s decision to reject a competing proposal from a different suitor. Through the litigation, Caremark’s board was forced to provide substantial additional disclosures to public shareholders and renegotiate the terms of the merger agreement with CVS. The settlement ensured statutory rights of Caremark shareholders, providing an additional $3.19 billion in cash consideration.

Delaware Chancery Court

Grant & Eisenhofer initiated litigation alleging that the directors and majority stockholder of Digex, Inc., breached fiduciary duties to the company and its public shareholders by permitting the majority shareholder to usurp a corporate opportunity that belonged to Digex. G&E’s efforts in this litigation resulted in an unprecedented settlement of $420 million, the largest settlement in the history of the Delaware Chancery Court.

Delaware Chancery Court

In the largest settlement of derivative shareholder litigation in the history of Delaware Chancery Court, G&E reached a $115 million settlement in a shareholder lawsuit against former executives of American International Group Inc. for breach of fiduciary duty. The case challenged hundreds of millions of dollars in commissions paid by AIG to C.V. Starr & Co., a privately held affiliate controlled by former AIG Chairman Maurice “Hank” Greenberg and other AIG directors. The suit alleged that AIG could have done the work for which it paid Starr, and that the commissions were simply a mechanism for Greenberg and other Starr directors to line their pockets.