Summary
This 8-K filing by Exelon Corporation (EXC) on June 16, 2023, details the proposed settlement of derivative lawsuits filed by shareholders. These lawsuits, stemming from conduct related to ComEd's July 2020 Deferred Prosecution Agreement with the Department of Justice, alleged breaches of fiduciary duties by current and former Exelon and ComEd officers, employees, and directors, as well as third parties. The company's Special Litigation Committee (SLC), appointed in 2021, has been investigating these claims and has reached an agreement in principle with the plaintiffs.
Key Highlights
- 1Exelon Corporation and its subsidiary ComEd are proposing a settlement for derivative lawsuits filed by shareholders concerning conduct related to ComEd's 2020 Deferred Prosecution Agreement.
- 2The proposed settlement, negotiated through mediation and approved by Exelon's Special Litigation Committee (SLC), Independent Review Committee (IRC), Board, and the Settling Shareholders, involves a $40 million payment to the Company from its insurers.
- 3Of the $40 million, $10 million will be allocated as an attorney's fee award to the Settling Shareholders' counsel.
- 4The settlement also includes various compliance and disclosure-related reforms, as well as certain changes in Board and Committee composition.
- 5The SLC filed a motion for preliminary approval of the settlement on June 16, 2023. The settlement requires court approval from Judge John Robert Blakey in the U.S. District Court for the Northern District of Illinois.
- 6Some demand letter shareholders have indicated their intention to oppose the settlement motion.
- 7The Company's insurers will fund the $40 million settlement payment.
Frequently Asked Questions
The settlement requires a payment of $40 million to the Company by its insurers. This means there is no direct cash outflow from Exelon's operating funds, as the payment comes from insurance proceeds. The $10 million attorney's fee award is also paid from this insurance settlement amount.
The derivative lawsuits were filed by shareholders alleging breaches of fiduciary duties and other claims against current and former Exelon and ComEd officers, employees, and directors, as well as third parties. These allegations are related to the conduct described in ComEd's Deferred Prosecution Agreement entered into with the Department of Justice in July 2020.
In addition to the $40 million from insurers, the settlement includes provisions for various compliance and disclosure-related reforms within the company. It also mandates certain changes in the composition of Exelon's Board and its Committees.
No, the settlement is not final. Exelon's SLC filed a motion for preliminary approval on June 16, 2023. The settlement requires approval from the court, specifically Judge John Robert Blakey. Some shareholders intend to oppose the motion, so there is a legal process for court review and potential objections.