*

Settlement includes policy changes on directors' conduct

and

whistleblower protections

*

Shareholders initially sought $8 billion for privacy

violations

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Cambridge Analytica scandal led to $5 billion FTC fine

By Tom Hals

WILMINGTON, Delaware,, Nov 20 (Reuters) - Mark

Zuckerberg and current and former leaders of Meta Platforms ( META )

agreed to pay the company $190 million to resolve

shareholder allegations that they damaged Meta by violating

Facebook users' privacy, according to a settlement unveiled on

Thursday.

The company's board also agreed to policy changes governing

directors' conduct, insider trading and whistleblower

protections.

The deal ended litigation by shareholders who accused the

Facebook co-founder and other defendants of saddling the company

with billions of dollars in fines and legal costs stemming from

violating privacy regulations.

SHAREHOLDERS ONCE SOUGHT $8 BILLION

The agreement fleshes out a deal announced in court on July 17

that ended a scheduled eight-day trial on its second day.

Shareholders were seeking $8 billion from Zuckerberg and 10

current and former directors and officers for allegedly allowing

Facebook users' personal information to be accessed without

their consent.

The defendants had denied all allegations.

The settlement dramatically cut short the trial before a string

of high-profile witnesses took the stand, including Zuckerberg,

billionaire investor and Meta board member Marc Andreessen,

former Chief Operating Officer Sheryl Sandberg, and former

Facebook board members Peter Thiel, the co-founder of Palantir

Technologies ( PLTR ), and Reed Hastings, the co-founder of

Netflix ( NFLX ).

Facebook in 2021 changed its name to Meta, which is also the

parent company of Instagram and WhatsApp. The company was not a

defendant.

Derivative lawsuits recover money from directors and

executives, which is paid to the company and therefore benefits

shareholders indirectly.

California State Teachers' Retirement System, one of the

shareholders who brought the case, said it was the

second-largest settlement ever of a derivative case in Delaware

that alleged board members failed in their duty to oversee the

company.

CRITICISM OF DELAWARE

Companies, including Meta, have left or considered ditching

Delaware as their legal home after Elon Musk had his $56 billion

pay package from Tesla voided by the Delaware court,

fueling criticism that the court was overly favorable toward

shareholder lawsuits.

"When we leverage our voice and use tools such as litigation

effectively, it benefits both companies and shareholders

long-term," said CalSTRS board Chair Denise Bradford in a

statement.

The plaintiffs' firms that brought the case will seek a fee

of up to 30% of the settlement and $4.8 million in expenses,

also paid from the settlement, according to court documents.

The settlement was paid from directors' and officers'

liability insurance policies.

The shareholders who brought the case claimed directors

failed to oversee Zuckerberg and Sandberg, who were allowed to

run an illegal data-harvesting enterprise.

The lawsuit was filed in the wake of the scandal surrounding

Cambridge Analytica, a now-defunct British political consulting

firm.

The firm secretly accessed data from tens of millions of

Facebook users to create targeted messages for clients that

included Donald Trump during his successful U.S. presidential

campaign in 2016. Officials from Trump's 2016 campaign have said

Cambridge Analytica played a minor role in the election.

Those revelations led to a record $5 billion fine by the

Federal Trade Commission and a series of other legal

settlements. Zuckerberg was also accused of trading Meta stock

to benefit from inside information.

The defendants said the evidence at trial would have

shown that Facebook had robust operations to protect user data.

They accused Cambridge Analytica of deceit.

"We sent a clear message that even the most powerful

directors and officers must take their oversight obligations

seriously," said Maxwell Huffman, a Scott + Scott attorney who

represented investors.