Cohen v. Calloway

Order, Supreme Court, New York County (Beatrice Shainswit, J.), entered May 20, 1997, which granted defendants’ motion to dismiss this shareholder derivative and proposed class action on the basis of documentary evidence, unanimously affirmed, with costs. The proxy statement in issue demonstrates that the BlackScholes method of valuing the stock options that was proposed for defendant corporation’s nonemployee directors would not have been viewed by the reasonable investor as a significant part of the total mix of information in the proxy statement (see, TSC Indus. v Northway, Inc., 426 US 438, 449; State of New York v Rachmani Corp., 71 NY2d 718, 726-727), and indeed the significance of such method is so imprecise that its inclusion probably would have done more harm than good (TSC Indus. v Northway, Inc., supra, at 448). Moreover, as the IAS Court found, the misrepresentation alleged by plaintiff was not part of the mix of information offered to the shareholders for purposes of evaluating the currently challenged stock option plan. We have considered plaintiff’s other claims and find them to be without merit. Concur—Sullivan, J. P., Ellerin, Tom and Andidas, JJ.