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Tuesday, July 23, 2024 | Back issues
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Dish Network CEO Can |Keep EchoStar Shares

LAS VEGAS (CN) - Dish Network CEO Charles Ergen can keep all 1.5 million shares in EchoStar that he received as its chairman in 2012, a federal judge ruled.

Investor Greg Jacobi filed a shareholder derivative action challenging Ergen's receipt of the shares as part of his compensation for being EchoStar's chairman.

Ergen is also the founder and principle shareholder of the global satellite communications company that owns Dish Network.

Jacobi argued the 1.5 million shares exceeded the company's annual cap limit by 800,000 shares, and in 2012 accused Ergen and board members of violating their fiduciary duty in awarding the shares to him.

EchoStar is traded on the NASDAQ stock exchange under the SATS symbol. It opened with a share price of $44.29 on Wednesday.

Jacobi claimed defendant members of the board's compensation committee are "dominated and controlled" by Ergen, making it impossible for them to remain impartial when awarding him shares.

U.S. District Judge Jennifer Dorsey on March 17 dismissed Jacobi's complaint, saying Jacobi did not provide enough facts, and that she had already given him a chance to fix the problem.

"Jacobi has failed to create a reasonable doubt that a majority of board of directors lacked the ability to exercise independent and disinterested business judgment to consider his pre-suit demand," Dorsey wrote.

Dorsey dismissed all claims without leave to amend.

"I have already given Jacobi leave to amend once, and he remains unable to conjure up enough facts to plead demand futility," Dorsey wrote. "I find that further amendment would be futile."

She said Jacobi pled facts showing Ergen and two directors "could not impartially consider a pre-suit demand. But he lacks facts to show that the remaining four board members ... were disinterested."

Dorsey also granted Ergen's motion to strike a supplement, in which Jacobi argued the "proffered authority is nonbinding." Dorsey said Jacobi filed the supplement without leave, and it improperly contains legal argument

Jacobi did not reply to the motion to strike the supplement. Dorsey ordered it stricken, and closed the case.

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