Schrodinger, Inc. has reached a proposed settlement of a derivative action with plaintiff Arnat Abzhanov, as per a recently released notice to stockholders. The action, initiated in September 2024, alleged breach of fiduciary duty and unjust enrichment against the company's non-employee directors. The proposed settlement aims to address these allegations through the adoption of corporate governance reforms and enhancements, as well as the introduction of a new director compensation policy.
The stipulation requires the company to implement a series of governance reforms, including the adoption of a new director compensation policy. This policy mandates the retention of an independent compensation consultant to annually review non-employee director compensation at peer companies and make recommendations to the board or compensation committee. It also sets limits on non-employee director compensation, ensuring it does not exceed the 60th percentile of the company’s peer group compensation.
Additionally, the company will now disclose in its annual proxy statements detailed information regarding the non-employee director compensation policy, the company’s peer group constituents, and the methodology for determining and approving the peer group.
It is important to note that any monetary benefit or recovery resulting from the settlement will go to Schrodinger, Inc., and not directly to the stockholders. However, the proposed settlement is contingent on court approval.
The proposed settlement aims to release all claims against the individual defendants and Schrodinger, Inc., which include allegations related to non-employee director compensation and related decisions. The settlement is intended to resolve the claims brought forth in the derivative action.
The notice emphasizes that the settlement does not imply any findings of violation of the law or that recovery could be had if the action was not settled. The proposed settlement will be subject to a hearing for court approval on June 18, 2025, and the company's stockholders are encouraged to review the notice carefully as their rights will be affected by the legal proceedings. Today the company's shares have moved 26.1% to a price of $24.25. Check out the company's full 8-K submission here.
