• Company
  • Description
  • Recovery Amount
  • Freeport-McMoRan
  • In re Freeport-McMoRan Copper & Gold, Inc. Derivative Litigation

 

Delaware Chancery Court

G&E served as co-lead counsel representing plaintiffs in this derivative action against the Board of Directors of Freeport-McMoRan Copper & Gold, Inc. arising from their decision to cause Freeport to acquire McMoRan Exploration Co. and Plains Exploration & Production Co. for over $20 billion. Plaintiffs alleged that these deals were rife with conflicts of interest as several Freeport directors were also directors of the acquired companies, and a majority of Freeport’s directors received significant personal benefits from the deal. Moreover, the transaction with McMoRan was largely viewed as a means to allow Freeport’s CEO and Chairman to maintain control over and protect investments in McMoRan at the expense of Freeport’s shareholders. In January 2015, after extensive mediation, the plaintiffs agreed to settle the claims against the Board for $137.5 million, plus the Board’s commitment to adopt corporate governance enhancements to deter future misconduct such as changes to policies regarding independent directors and performance-based executive compensation. Two months later, in March 2015, Freeport’s financial advisor, Credit Suisse Securities (USA) LLC, agreed to contribute an additional $10 million in cash plus $6.5 million in credit against future services provided to Freeport, bringing the total value of the settlement to $153.75 million. Notably, and in a historic first for derivative litigation, the entire cash component of the settlement – $147.5 million – was distributed to Freeport shareholders in the form of a special dividend. Vice Chancellor Noble called the settlement “an exceptional recovery,” as “one of the largest cash settlements of a derivative action, and perhaps more importantly, [unlike traditional derivative settlements] the proceeds will largely go to the shareholders.”