Cnet options backdating
All books and records showing the extent to which the CNET compensation committee delegated (or did not delegate) to management, either expressly or by custom and practice, the authority to select the exercise price or grant date of stock options under the 1997 plan and, if such delegation occurred, the extent to which the compensation committee was made aware of the exercise prices and dates selected. Judge Alsup also noted that those categories were without prejudice to other possible requests, and ordered plaintiffs to make their books and records demand by May 14, 2007. May 9, 2007) (stay pending books and records demand). On June 19, 2006, plaintiffs filed their initial complaint in the District Court for the Northern District of California alleging federal securities and state law claims against CNET and its directors relating to backdated stock options. First, there is nothing "excessive" about requiring a petitioner to plead the elements of the statute under which he or she petitions the court. at 646 (noting that because West Coast's "sole purpose is to use the information it seeks to replead demand futility" an action it is precluded from doing it lacks a proper purpose under section 220).
In this demand letter, plaintiffs made six requests: 1.
In so arguing, defendant relies heavily on Polygon Global Opportunities Master Fund v. In Polygon, Vice Chancellor Lamb refused to grant an investigation under section 220 where the shareholder, an arbitrage fund, purchased shares in the West Corporation after an announced reorganization and then sought a books and records inspection to look into potential derivative claims in connection with the proposed reorganization plan.
from the Supreme Court's opinion in Saito that indicates "if the stockholder's only purpose [in pursuing a section 220 books and records inspection] was to institute derivative litigation," one might reasonably question "whether the stockholder's purpose was reasonably related to his or her interest as a stockholder." However, Polygon and West Coast are distinguishable, and Saito, while instructive, mandates a different result than what defendant proposes.
The district court analyzed individually the eight option grants that plaintiffs alleged were backdated and concluded that plaintiffs successfully pleaded particularized facts with respect to only the grants on June 3, 1998, April 17, 2000, and October 8, 2001.
Judge Alsup also found unpersuasive plaintiffs' attempts to show demand futility under the second prong of Aronson, concluding that plaintiffs failed to allege the particularized facts necessary to demonstrate that board members actually engaged in the process of backdating.1.
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Plaintiffs, who are shareholders of CNET, initiated this action under 8 Del. § 220 to seek books and records relating to stock options backdating a practice in which the company has already admitted it engaged after being ordered to do so by a federal judge in California.