Plaintiffs in this case accused Simon Property Group of improperly awarding one million Long Term Incentive Performance (“LTIP”) units without shareholder approval. The company canceled the original award and issued an amended LTIP grant where the vesting of the LTIP units was conditional on certain performance hurdles being reached. Plaintiffs’ counsel then moved for fees to be awarded based upon an expert’s analysis of the difference in value between the original award and the amended award.
Compass Lexecon and Affiliate Harvard Professor Allen Ferrell were retained by the defendant to analyze the value differential between the original LTIP grant and the amended LTIP grant. Professor Ferrell opined that the Plaintiffs’ expert failed to use the proper metric to model the vesting conditions, and also inappropriately raised the volatility of the inputs by limiting his analysis to the post-financial crisis period, rather than looking at the volatility over a longer time period. As a result Professor Ferrell was able to demonstrate that Plaintiffs’ expert overstated the true value saved by the amended award. Based upon the analysis conducted by Professor Ferrell, the Court found that “plaintiffs’ expert made erroneous assumptions and used incorrect information in his calculations.” The Court went on to award fees based upon the calculations of Professor Ferrell, ultimately awarding Plaintiffs’ counsel fees that were approximately 10% of those fees initially demanded.
Compass Lexecon worked with Dan Leffell of Paul, Weiss, Rifkind, Wharton & Garrison LLP. Professor Ferrell was supported by Alex Rinaudo and Tristam Worth of Compass Lexecon’s New York office.