Fidelity National’s Chairman Sued Over Buyout of Firm He Controlled
Fidelity National’s Chairman Sued Over Buyout of Firm He Controlled
(Bloomberg) -- Fidelity National Financial Inc. Chairman William Foley II was sued by a pension fund over the largest U.S. title insurer’s $2.7 billion acquisition of a life-insurance company connected to him.
Foley in February pushed for the buyout of FGL Holdings Inc. -- in which he was the controlling stockholder -- to “improperly enrich himself” at the expense of Fidelity’s shareholders, the Miami-based fund said in a Delaware lawsuit.
“Because the transaction was never conditioned on a stockholder vote, FNF stockholders had zero voice at the ballot box” about the wisdom of the deal, the fund’s lawyers said in the Chancery Court suit.
The suit, filed Aug. 4, was unsealed Aug. 7 under the court’s public-access rules.
“This complaint is wholly without merit,” Peter Sadowski, the title insurer’s chief legal officer, said in an emailed statement. “Through innuendo and publicity-grabbing turns of a phrase, this suit is a gross distortion of the company’s track record under its chairman and a highly talented, independent and experienced board of directors.”
Golden Knights
Foley is one of the highest-paid U.S. executives, with a $104.9 million package in 2014, fourth-highest in the country. Foley’s pay that year topped Tesla Motors Inc.’s Elon Musk and Oracle Corp.’s Larry Ellison, according to the Bloomberg Pay Index, a ranking of the 100 highest-paid U.S. executives.
Foley led an investment group that bought the NHL’s Las Vegas Golden Knights expansion franchise that began play in 2017. Members of the Maloof family, which once owned the National Basketball Association’s Sacramento Kings and the Las Vegas-based Palms Casino Resort, invested with Foley.
In the Delaware suit, the City of Miami General Employees and Sanitation Employees Retirement Trust accused Foley of operating a “veritable spider’s web of inter-related corporate entities” through which he has “skimmed millions of dollars” for his own benefit. The FGL case was just another example of this practice, the fund alleged.
Foley, who founded Fidelity in 1984 and still serves as chairman, loaded its board with his supporters to ease the way for transactions such as the FGL purchase, said the fund, which filed its suit as a derivative action on behalf of the company. That means any recovery will go back into Fidelity’s coffers.
Controlling Stake
Because of Foley’s controlling stake in FGL, a life insurer, his colleagues on Fidelity’s board formed a special committee to weigh the deal, according to court filings. “At the Special Committee’s first formal meeting, it abdicated what little authority it had by authorizing Foley” and another director to negotiate on the group’s behalf, the filings claim.
“The proverbial fox was negotiating on behalf of the hen house,” the fund’s lawyers said in the 86-page complaint.
The fund contends Fidelity overpaid for FGL and special-committee members rolled over to Foley’s desire to garner a big pay day by acquiring the insurer, according to court filings.
The case is City of Miami General Employees and Sanitation Employees Retirement Trust v. William P. Foley II, No. 2020-0650, Delaware Chancery Court (Wilmington).
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