## Facts

- Activision Blizzard, Inc. was controlled by Vivendi S.A., which held a majority stake.
- In 2013, Activision executed an $8.2 billion “Restructuring” through (1) Activision’s repurchase of a large block of Vivendi shares and (2) a purchase of additional Vivendi shares by ASAC, an entity formed and controlled by Activision’s CEO (Robert Kotick) and a senior director/co-chair (Brian Kelly).
- Stockholder plaintiffs filed consolidated class and derivative actions alleging fiduciary breaches arising from conflicts, including that the Restructuring diverted value and a corporate opportunity to Vivendi, Kotick, Kelly, and ASAC, and caused Activision to overpay or otherwise suffer corporate harm.
- After extensive discovery and completion of expert depositions, the parties negotiated a global settlement before trial.
- The settlement required defendants to pay $275 million to Activision, reduce the voting power cap of Kotick and Kelly from 24.5% to 19.9%, and expand the board to add two directors unaffiliated with them, in exchange for broad releases of claims relating to the Restructuring.
- Certain stockholders objected, including an argument that the settlement delivered consideration to the corporation but not directly to the stockholder class.

## Issues

1. Whether the global settlement of consolidated class and derivative fiduciary-duty claims was fair, reasonable, and adequate.
2. Whether it was permissible to release potential direct (class) claims as part of a settlement where the principal monetary consideration flowed to the corporation.
3. Whether the requested attorneys’ fee award was reasonable in light of the monetary and governance benefits achieved.
4. Whether objectors’ counsel were entitled to fees for claimed contributions to the settlement outcome.

## Decision

- The Court of Chancery approved the settlement as fair, reasonable, and adequate.
- The court held that a global settlement could release both derivative and direct claims where the allocation of consideration was reasonable given the nature and strength of the claims and the litigation risks.
- The court awarded $72.5 million in attorneys’ fees to lead counsel and ordered lead counsel to pay $50,000 to the lead plaintiff from that award.
- The court denied fee requests by counsel for certain objectors, finding no measurable benefit attributable to their efforts.

## Legal Principles

- A court may approve a settlement releasing both direct and derivative claims when the overall compromise is fair and the consideration reasonably reflects the strengths, weaknesses, and risks of the litigated theories.
- Consideration flowing to the corporation can support approval of a global settlement, including the release of class claims, when the primary alleged economic injury is corporate in character and the class’s interests are adequately represented.
- Monetary recoveries paid to the corporation may be treated as a common-fund-type benefit for fee purposes in representative litigation, and meaningful governance reforms may count as compensable corporate benefits.
- Objectors’ counsel are entitled to fees only upon showing that their efforts produced a concrete, non-duplicative benefit (such as an improvement in settlement terms).

## Conclusion

The court approved a pretrial, global resolution of fiduciary-duty litigation challenging a controller exit and management participation, finding the $275 million corporate payment and governance reforms sufficient to justify broad releases, a substantial fee award to lead counsel, and no fee for objectors who failed to demonstrate a resulting benefit.


In re Activision Blizzard, Inc. Stockholder Litigation, 124 A.3d 1025 (Del. Ch. 2015)