New York, NY: (Aug-08-07) A shareholder lawsuit was brought against CVS Caremark Corp., alleging that the company engaged in stock-options backdating. Caremark Rx, a major pharmacy benefits manager that drug-store chain CVS acquired in March 2007, is one of numerous companies whose stock-options practices have been investigated by the government. The suit stems from a document subpoena that Caremark received from the US Attorney's Office for the Southern District of New York and an informal inquiry from the Securities and Exchange Commission requesting information about its options granting practices.
The case got class action status after the Tennessee state court cases also were consolidated and later amended to add CVS and its directors as defendants. In a settlement reached, the defendants agreed to maintain for at least four years a number of governance provisions relating to the exercise and disclosure of stock-option awards, and will not oppose the plaintiffs' petition for an award of legal fees and expenses of a maximum of $7.5 million. Further, as part of the agreement, an SEC filing stated that the plaintiffs will dismiss the case and release CVS Caremark and the other defendants from claims asserted in the case, and the temporary restraining order will be vacated. [
