Facebook Inc. (NASDAQ:FB) agreed to settle the lawsuit filed by an investor alleging that the social network giant inappropriately allowed its directors to set their own compensation. The investor also claimed that CEO Mark Zuckerberg exceeded the allowable compensation for certain senior officials.
In 2013, the non-employee directors of Facebook received an average stock award worth $46,000. The amount was 43% higher than stock award received by their peers in the industru, according to Ernesto Espinoza, an investor who filed the case against the social network giant.
Facebook settlement with the investor
According to Bloomberg, Facebook agreed settled Espinoza’s lawsuit by amending its pay schedules and to monitoring closely the compensation process for its executives.
Undre the settlement agreement, the social network giant agreed to perform annual compensation assessments and hire an independent compensation consultant. Its Board will be responsible for monitoring compensation changes and it would consider stockholder’s approval of its compensation program during the annual meeting this year.
In a statement, Facebook spokesperson Vanessa Chan, said, “We believe that resolving this matter is in the best interests of the company and its shareholders so we can continue to focus on our mission and business.”
Coourt documents showed that Espinoza’s lawyers agreed partly to prevent “the significant risk, expense and length of continued proceedings.”
“Counsels also are mindful of the inherent problems of proof and possible defenses to the claims alleged in such actions,” according to the lawyers representing Espinoza.
The Judge will consider the settlement between Facebook and Espinoza during a fairness hearing at the Delaware Chancery Court.
