United States District Court for the Northern District of California
2002 WL 243597 (N.D. Cal.)
The directors of Cisco Systems, Inc. (Cisco) (defendants) circulated a proxy statement to shareholders with information regarding a proposed amendment to Cisco’s Automatic Option Grant Program that would increase the number of stock options granted to outside directors. The proxy statement did not contain the value of the option grants under the amendment based on the theoretical Black-Scholes pricing model. The amendment was approved by a shareholder vote. The plaintiff brought suit, alleging a violation of Section 14(a) of the Securities and Exchange Act of 1934 in that the proxy statement omitted the pricing model and therefore the alleged true value of the options.
Rule of Law
Holding and Reasoning (Tashima, J.)
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