Gemstar-TV Guide International announced that arbitrators have ruled in its favor in a wrongful termination dispute with former chairman and chief executive officer Henry C. Yuen.
According to the media company, the arbitrators determined that Yuen must pay the company $93.6 million, plus attorneys’ fees and interest, stemming from his firing in April 2003.
That total comprises about $6.1 million in salary paid to Yuen since he was fired, about $6.9 million for Yuen’s attorneys’ fees and costs that was advance to him — and about $80.6 million in damages. That massive penalty, noted the company, reflects Yuen’s breaches of the representations and warranties he made to Gemstar during its November 2002 restructuring. Arbitrators also ruled that Yuen is not entitled to roughly $30.9 million set aside for him.
“We are very pleased with the arbitrators’ ruling,” said Gemstar executive vice president and general counsel Stephen H. Kay, in a statement. “It brings to a close an extended period of arbitration and litigation with Mr. Yuen. In addition, it is gratifying that Mr. Yuen has been held accountable for a sizeable portion of the harm that he caused the company and its shareholders during his tenure as chairman and chief executive officer.”
Yuen’s attorney could not immediately be reached for comment.
The Securities and Exchange Commission accused Yuen and former chief financial officer Elsie Leung of inflating Gemstar’s revenue by $250 million between March 2000 and September 2002 to meet revenue projections and boost the company’s share price. Last February, Leung settled with the SEC, agreeing to disgorge $600,000 and pay $750,000 in civil penalties; in a separate settlement with Gemstar, she relinquished claim to $8.4 million that had been set aside for her.
Last May, a federal judge ordered Yuen to pay more than $22 million to settle SEC charges stemming from his role in the accounting scandal. The sum included penalties, interest, and a return of ill-gotten gains.
Inn December, the SEC said shareholders who were harmed by fraudulent accounting and disclosure practices at Gemstar would begin receiving about $83 million in cash and stock under the “Fair Funds” provision of the Sarbanes-Oxley Act. The funds include $22.3 million recovered through the SEC’s enforcement actions against Gemstar, four former Gemstar executives, and auditor KPMG. The funds also include payments by Gemstar and KPMG to settle a related private class action lawsuit.