Semiconductor company Broadcom Corp. (BRCM), said Wednesday that the remaining defendants in a consolidated shareholder lawsuit against certain former and current board members have entered into a settlement.
The derivative actions were filed in 2006 by certain shareholders against each of the then members of Broadcom's Board of Directors and certain current and former officers, who were charged with illegal backdating of stock options.
Those named in today's settlement are Broadcom's former Chief Executive Officer and co-founder Henry Nicholas, III; former Chief Financial Officer William J. Ruehle; and Chief Technical Officer, co-founder, and current nominee to the Board Henry Samueli.
In 2009, Broadcom, along with the plaintiffs and certain defendants had entered into a partial settlement in the federal derivative action.
The settlement provides Broadcom a payment of $26.6 million from Nicholas, while Ruehle will cancel an action filed by him against Broadcom, which seeks damages of over $26 million.
Further, Samueli will pay $2.3 million in cash to the Broadcom Foundation, while Broadcom will cancel unexercised Broadcom stock options valued $24.3 million that is held by Samueli.
Nicholas, Ruehle, and Samueli will also be dismissed with prejudice from the federal consolidated shareholder derivative litigation.
If the Court accepts the parties' proposed schedule for approving the settlement, it is expected that a final approval hearing will occur before the end of the second quarter, ending June 30.
Broadcom also said it expects to report a one-time gain of about $50 million during the quarter in which Broadcom receives the cash payment from Nicholas and Samueli's stock options are canceled.
Out of that sum, Broadcom said it has agreed to pay plaintiffs' counsel $25 million for attorneys' fees, and costs, subject to Court approval. Also, Broadcom expects to contribute $25 million to the Broadcom Foundation.
The company expects the settlement to have a neutral effect on its consolidated statement of income in the quarter in which such settlement occurs.
BRCM closed Wednesday's regular trade at $40.51, up $0.50 or 1.25%, on a volume of 5.83 million shares on the Nasdaq. In after hours, the stock further gained $0.04 or 0.10%.
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