Facebook Inc. has agreed to pay nearly $69 million in attorneys’ fees in a mooted shareholder lawsuit over a scrapped plan that would have reclassified the company’s stock. The deal was reached in late October in Delaware Chancery Court.
The deal marked the end of a legal battle over attorneys’ fees that that continued long after the actual lawsuit ended in 2017. It results in Facebook only having to pay out about half of what the shareholders who filed the lawsuit had sought. Among the shareholder group’s objectives was to prevent Facebook CEO Mark Zuckerberg from holding onto power after he let go of his shares.
Attorneys for the shareholder group argued they were owed $129 million for the lawsuit against Facebook. The social media giant decided against going forward with its reclassified stock plan shortly before the case headed to trial. The court, however, said a total of $68.7 million would suffice to resolve all claims.
Reclassification plan scrapped
The case began after Facebook released its plan to reclassify shares that would have debuted a new stock class. Shareholders who were party to the lawsuit alleged Zuckerberg would have been able to maintain the same voting power in the company even after selling off much of his Facebook ownership for charity, a plan he had publicly expressed.
Facebook decided to drop the plan to reclassify stocks before the trial, but the argument from the plaintiffs was that they were owed $129 million for getting the same result as they would have gone after in court. This would have made it one of the largest attorney fee awards in the history of that court.
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