Goldman Tells Chancery Revived Suit Could Open Floodgates


Sean Griffith was quoted in a Law360 article about his objection to a proposed settlement in a lawsuit against Goldman Sachs.

A stockholder challenge to Goldman Sachs Group Inc.’s non-employee director compensation terms — back in court after a rejected settlement last year — could “open the floodgates” for similar litigation, an attorney for the directors told a Delaware vice chancellor on Monday.

Robert J. Giuffra Jr. of Sullivan & Cromwell LLP, counsel to the directors named in the suit, made the point while seeking dismissal of the case after Vice Chancellor Sam Glasscock III rejected a deal in late October that would have required additional disclosure about the company’s stock incentive plan, among other provisions.

The vice chancellor had ruled that releases of derivative claims, sought on behalf of the company by stockholder Shiva Stein, would not have been fair to the company.

A. Arnold Gershon of Barrack Rodos & Bacine LLP, counsel to Stein, said that Goldman in part “asked stockholders to approve something that was going to be bound to the performance goals of another plan that they did not disclose.”

If the case goes forward, Gershon said, discovery or expert testimony could be required to determine the liability of directors for the action.

Giuffra said no one has dealt with some aspects of the case, including arguments that good faith had been “read out” of a stock incentive plan “notwithstanding that it has been approved by the shareholders of Goldman Sachs four times.”

Also potentially adding a wrinkle to the case was Fordham University School of Law professor Sean J. Griffith’s argument in favor of a $575,000 objector’s fee, which was sought after the vice chancellor rejected the settlement.

Anthony A. Rickey of Margrave Law LLC, counsel to Griffith, said the monetary and non-monetary benefits from scuttling the settlement and accompanying liability releases justified the award, which mirrored the $575,000 fee sought by Stein’s attorney in the rejected settlement.

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