Kessler Topaz served as co-lead counsel in a shareholder derivative action challenging 2.745 million “spring-loaded” stock options.
On the day before CytRx announced the most important news in the Company’s history concerning the positive trial results for one of its significant pipeline drugs, the Compensation Committee of CytRx’s Board of Directors granted the stock options to themselves, their fellow directors and several Company officers which immediately came “into the money” when CytRx’s stock price shot up immediately following the announcement the next day. Kessler Topaz negotiated a settlement recovering 100% of the excess compensation received by the directors and approximately 76% of the damages potentially obtainable from the officers. In addition, as part of the settlement, Kessler Topaz obtained the appointment of a new independent director to the Board of Directors and the implementation of significant reforms to the Company’s stock option award processes. The Court complimented the settlement, explaining that it “serves what Delaware views as the overall positive function of stockholder litigation, which is not just recovery in the individual case but also deterrence and norm enforcement.”