Mark Zuckerberg and other Meta Platforms Inc. directors agreed to a $190 million settlement of claims they failed t
o rectify repeated violations of Facebook users’ privacy and improperly engineered an accord to shield the billionaire c
hief executive officer from personal liability, court filings show.
The amount of the settlement, disclosed in a filing Thursday in Delaware Chancery Court, had been sealed since a t
rial was halted in July. A lawsuit by Meta investors claimed b
oard members mishandled the Cambridge Analytica data privacy scandal and improperly agreed to a $5 bill
ion US Federal Trade Commission settlement to personally protect Zuckerberg.
Meta shareholders sought at least $7 billion in damages, arguing directors wrongfully overpaid in the FTC deal to p
revent Zuckerberg from digging into his own pocket to cover some of the financial hit to the company. The acc
ord, which will be paid by an insurance policy covering Meta directors, amounts to a recovery of 3%. In a court filing, the company denied wrongdoing and sai
d the settlement wasn’t an admission that it was liable.
“We are pleased that a settlement was reached that reinforces our longstanding commitment to strong corporate governance,” Meta said in a statement Thursday.
The case centered on disclosures that an outside developer colle
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cted personal data from millions of Facebook users without their consent. Cambridge Analytica used the information after being hired by now-President Donald Trump’s 2016 election campaign.
Meta shareholders sued Zuckerberg and other directors – including venture-capitalist Marc Andreessen – h
oping a judge would hold them personally liable for billions in fines and legal costs tied to repeated violation
of the company’s privacy policies. FTC officials fined Facebook $5 billion in 2019 after finding it violated a 2012 ag
reement with regulators mandating it get users’ permission before sharing their data.
The deal also requires Meta to make changes to some of its corporate governance policies, including toughening up privacy monitoring and making it harder to
retaliate against employees who point out privacy missteps, according to court filings. Meta also agreed to set u
p a code of conduct for directors focused on avoiding conflicts of interest and beefing up compliance with “laws and regulations,” the filings show.
Because it’s a derivative case — one that allows investors to sue board members on behalf of the company — the pro
posed settlement must be approved by Chancery Judge Kathaleen S.J. McCormick. The $190 million in insurance
payments will go back to the company rather than to any individual investor.
Lawyers for Meta investors – which include retirement funds and an individual shareholder – laid out the accor
ds’ terms in a filing designed to tee it up for approval by McCor
mick. Samuel Closic, a lawyer for Meta shareholders who s
ued, said Thursday he was “proud of the settlement” and looked forward to presenting it to McCormick.
McCormick is the same judge who rejected Tesla Inc. CEO Elon Musk’s $55 billion pay package. That ruling and a handful of others — part of a court crackdown
on insider conflicts of interest — prompted several companies to shift their states of incorporation to
Nevada and Texas, including Tesla and Bill Ackman’s Pershing Capital. They cited alleged judicial bias against tech leaders such as Musk and Zuckerberg.