Robbins Umeda LLP* Achieves Settlement for Kratos’ Shareholders
April 29, 2010 (San Diego, CA) – The settlement approved by the United States District Court for the Southern District of California between certain former and current officers and directors of Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS) (formerly known as Wireless Facilities, Inc.), the company, and plaintiff shareholders in a shareholder derivative action filed in August 2004 became final today, according to Robbins Umeda LLP, co-lead counsel for the plaintiffs.
The settlement resolves claims arising out of Kratos’ August 4, 2004 announcement that it would have to reissue its financial statements for fiscal years 2000 through 2003 to accrue for certain foreign tax contingencies and discrepancies in the company’s stock options award and accounting practices.
The settlement requires certain current and former officers to forfeit significant amounts of stock and stock options back to Kratos. In addition, the settlement restricts voting rights for certain former officers and directors, calls for monetary reimbursement to the company, and achieves a number of important changes to Kratos’ corporate governance. These changes, which are designed to improve the oversight and accountability of Kratos’ board of directors and to prevent a recurrence of the alleged misconduct, include the addition of two independent directors to Kratos’ board of directors and an annual review of the chairman of the board’s performance, among other changes.
“We are very proud of the benefits achieved for Kratos shareholders and Kratos in this settlement,” said Brian Robbins, co-lead counsel for the plaintiffs. “Derivative settlements often involve the adoption of corporate governance measures, the payment of money to the company, or the forfeiture or return of stock or options to the company. This settlement includes all of these components, and also establishes meaningful stock voting restrictions for certain insiders. This is an outstanding result for Kratos and its shareholders.”
The Court agreed, writing, “The Court also notes that the settlement appears to place the shareholders in a much better position than that which existed prior to the beginning of this litigation. The Court finds that the settlement is fundamentally fair, adequate, and reasonable under all the circumstances in the case.” Transcript at 10:6-8.
For more information about In re Wireless Facilities, Inc. Derivative Litigation, Case No. 04-CV-1663-JAH-(NLS), please visit www.robbinsarroyo.com and click on “Notices.”
* The firm name changed from Robbins Umeda LLP to Robbins Arroyo LLP on January 1, 2013.