Zuckerberg, Meta directors agree to $190 million settlement of shareholder privacy case
(Corrects paragraph 9 to show its second-largest derivative settlement involving allegations that directors failed in their oversight duty in paragraph nine. Prior version said it was the second-largest derivative settlement.)
By Tom Hals
WILMINGTON, Delaware, (Reuters) -Mark Zuckerberg and current and former leaders of Meta Platforms agreed to pay the company $190 million to resolve shareholder allegations that they damaged Meta by violating Facebook users' privacy, according to a settlement unveiled on Thursday.
The company's board also agreed to policy changes governing directors' conduct, insider trading and whistleblower protections.
The deal ended litigation by shareholders who accused the Facebook co-founder and other defendants of saddling the company with billions of dollars in fines and legal costs stemming from violating privacy regulations.
SHAREHOLDERS ONCE SOUGHT $8 BILLION
The agreement fleshes out a deal announced in court on July 17 that ended a scheduled eight-day trial on its second day. Shareholders were seeking $8 billion from Zuckerberg and 10 current and former directors and officers for allegedly allowing Facebook users' personal information to be accessed without their consent.
The defendants had denied all allegations.
The settlement dramatically cut short the trial before a string of high-profile witnesses took the stand, including Zuckerberg, billionaire investor and Meta board member Marc Andreessen, former Chief Operating Officer Sheryl Sandberg, and former Facebook board members Peter Thiel, the co-founder of Palantir Technologies, and Reed Hastings, the co-founder of Netflix.
Facebook in 2021 changed its name to Meta, which is also the parent company of Instagram and WhatsApp. The company was not a defendant.
Derivative lawsuits recover money from directors and executives, which is paid to the company and therefore benefits shareholders indirectly.
California State Teachers’ Retirement System, one of the shareholders who brought the case, said it was the second-largest settlement ever of a derivative case in Delaware that alleged board members failed in their duty to oversee the company.
CRITICISM OF DELAWARE
Companies, including Meta, have left or considered ditching Delaware as their legal home after Elon Musk had his $56 billion pay package from Tesla voided by the Delaware court, fueling criticism that the court was overly favorable toward shareholder lawsuits.
“When we leverage our voice and use tools such as litigation effectively, it benefits both companies and shareholders long-term,” said CalSTRS board Chair Denise Bradford in a statement.
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