A year and a half after Jeffrey Katzenberg was sued by DreamWorks Animation shareholders over a lucrative side deal from the 2016 $3.8 billion sale of the How To Train Your Dragon company to Comcast, the now WndrCo boss is trying to settle up.
In a proposed deal filed earlier this week in Delaware’s Chancery Court, Katzenberg has offered to pay $3.5 million into a settlement account to make the matter from a trio of investors go away. There is no indication in the paperwork submitted this week if the money is actually coming from Katzenberg himself or his insurance company, though the latter seems more likely. We do know that a check for an additional $1 million will be written by successor company DWA Holdings for the settlement too. Coming out of mediation conducted last summer, the proposed resolution still requires approval by Chancellor Andrew Bouchard to see the legal action fully ended.
After the inevitable lawyers’ fees and expenses, the remaining settlement dough will be paid out on a proportional basis to the plaintiffs.
Big bucks for most of us, but undoubtedly a pittance of the payout that the 2016 Comcast purchase alone delivered to the DWA majority shareholder and then- CEO. The agreement sees no admission of wrongdoing on Katzenberg’s part. “Defendant is entering into this stipulation solely to eliminate the uncertainty, burden, and expense of further protracted litigation,” the January 9 filed paperwork declares. “Defendant denies any wrongdoing, and this stipulation shall in no event be construed or deemed to be evidence of or an admission or concession on the part of the Defendant,” it adds (read it here).
As the former animation kingpin has conceded no bad behavior, consolidated plaintiffs the Ann Arbor City Employees Retirement System, Kenneth Bumba, and Teamsters Local 677 Health Services & Insurance Plan have not withdrawn their assertions, nor accepted Katzenberg’s defense that his well- compensated consulting gig from Comcast actually helped get the shareholders a better deal in the sale. First filed in June 2016 and having survived efforts by the deep-pocketed long time Democrat donor to get the respective cases tossed, the trio still maintains “that Katzenberg had breached his fiduciary duties to the Company’s minority stockholders and violated the Company’s certificate of incorporation in connection with the acquisition of DreamWorks by non-party Comcast Corporation.”
In what does seem to be a delicate dance of sorts, Katzenberg gave Comcast his necessary consent to the $41 a share sale in part with the charter escaping and lucrative consulting position. Additionally, the ex-Disney chair scored himself 7% of the profits “in perpetuity” for the newly created AwesomenessTV-focused venture DreamWorks New Media, and the DWA Nova 3D animation technology division.
So, a few million here and there, this likely settlement looks like a pretty good deal all-round for Jeffrey Katzenberg.
Gary Bornstein of the NYC office of Cravath, Swaine & Moore LLP is Katzenberg’s primary lawyer in this matter. Davis Polk Wardwell LLP’s Lawrence Portnoy represents DWA Holdings. Attorneys from NYC’s Friedman Oster & Tejtel PLLC and Bernstein Litowitz Berger & Grossmann LLP plus Wilmington’s Grant & Eisenhofer P.A. and Radnor, PA’s Kessler Topaz Meltzer & Check, LLP are handling things for the plaintiffs.