Homestore Settles CalSTRS-led Suit
The suit had accused the Internet real estate company of falsifying financial statements and engaging in accounting irregularities (see CalSTRS Sets Sights on Homestore Shenanigans ). Last year CalSTRS, the nation’s third largest public pension fund, said its Homestore investments cost the $100 billion pension fund $9 million. Homestore, which operates real estate Web sites such as Realtor.com, is a once-high dot-com stock.
Under the settlement, subject to approval by the U.S. District Court in Los Angeles, Homestore will adopt innovative and cutting edge corporate governance provisions including:
- Requirements for independent directors and special committees
- A non-classified board of directors with two-year terms
- Appointment of a new shareholder-nominated director
- Prohibition on the future use of stock options for director compensation
- Requirements for minimum stock retention by officers after exercise of future stock option grants
Homestore also will pay $13 million in cash and issue 20 million shares of common stock to members of the class, according to CalSTRS.
The settlement covers only Homestore, Inc. and certain officers and directors. Legal action against other defendants in the case is pending, including:
- Stuart H. Wolff, former chief executive officer and chairman of the board of Homestore;
- Peter B. Tafeen, former executive vice president, business development and sales; and
- PricewaterhouseCoopers, the accounting firm that audited Homestore’s financial statements.
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