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By Yin Wilczek
Yahoo Inc. agreed to pay almost $2.4 million in attorneys’ fees to resolve a shareholder lawsuit over the firing of a senior executive that led to almost $60 million in severance payments.
The company said Aug. 8 in court filings that its board agreed to pay the “mootness fee” in light of the lawsuit’s contribution “to the actions taken by the Company.” Plaintiffs’ firms seek such fees where the claims in a lawsuit are rendered moot by some action taken by the defendant ( Buch v. Filo , Del. Ch., No. 10933-VCL, 8/8/17 ).
The lawsuit was filed in April 2015 by shareholder Cathy Buch.
In 2014, then-Chief Executive Officer Marissa Mayer fired Henrique de Castro, the company’s chief operating officer, after only 14 months on the job. The termination triggered almost $60 million in severance benefits for de Castro, who during his short time at Yahoo was paid more than Mayer.
Buch and Amalgamated Bank, another Yahoo shareholder, filed separate actions over how Mayer and Yahoo’s board handled the situation.
The company in June 2016 established a special board committee to consider the shareholders’ allegations. In May this year, the committee issued a report concluding that de Castro’s firing violated the company’s bylaws because it hadn’t been approved by the full board. However, the committee also concluded that Buch didn’t have viable claims because the board members involved hadn’t acted in bad faith or with gross negligence. The committee further found “no evidence that a full Board vote on de Castro’s termination would have yielded a different result.”
Yahoo subsequently adopted executive compensation governance practices recommended by the committee.
Buch agreed to drop her claims in light of the board’s actions. Vice Chancellor J. Travis Laster approved the settlement Aug. 8.
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