Fees Awarded in Abaxis Securities Settlement
SAN FRANCISCO (CN) - After settling a class action accusing it of issuing too many company shares to its executives, Abaxis must pay the attorneys for its shareholders more than a half million dollars.
The St. Louis Retirement System led the 2012 federal class action, which accused the Abaxis board of directors of violating the company's 2005 Equity Incentive Plan in issuing more than 2 million restricted shares to company officers and other workers without shareholder approval.
Though its plan limits the number of shares to only 500,000, shareholders cited the company's filings with the U.S. Securities and Exchange Commission in alleging that the board approved far more.
In a Jan. 16, 2014, stipulation of settlement, Abaxis officials agreed to implement "corporate governance measures" relating to officer and director compensation and "equity award-granting procedures. The settlement also required Abaxis to pay up to $2 million in attorneys' fees and legal costs as determined by the federal court.
After receiving approval of the deal in April, the St. Louis Retirement System sought $1.65 million in fees.
U.S. District Judge Yvonne Gonzalez Rogers ordered Abaxis on Monday to pay $579,429.53 as a partial award of attorneys' fees and expenses.
"The court agrees that many of the claimed expenses here are excessive or inadequately supported," Rogers wrote. "The travel expenses for multiple attorneys to attend the mediation will not be allowed. However, the expenses for two attorneys to attend the hearings here were reasonable."
The court used the lodestar method to determine the final amount for Abaxis to reimburse to St. Louis Police Retirement System.
"In this case, since the settlement did not create a common fund, the court utilizes the lodestar method to determine reasonable attorneys' fees," Rogers said. "There is a strong presumption that the lodestar figure represents a reasonable fee."
The shareholders' original complaint alleged that the company's annual SEC filing showed NASDAQ had sent a letter outlining how the company did not abide by its published equity compensation plan requiring stockholder approval before changing its terms. Instead, company officials made misleading statements during its September 2012 annual meeting of shareholders, according to the shareholder suit.
During a 2012 shareholder meeting, company officials left shareholders "uninformed or misinformed" when they issued a proxy that omitted explaining "the basis for the compensation committee's decision to eliminate the Restricted Stock Limit - e.g., that the grantor defendants had already violated the 2005 Plan by dramatically exceeding the restricted stock limit," the complaint said.
St. Louis Police Retirement System is represented by Ramzi Abadou and Eric Peterson in San Francisco; and Erin Zager, James Miller and Matthew Goldstein in Radnor, Pa., of Kessler Topaz Meltzer & Check.