Madison Square Garden Sports Corp. 10-Q

Item 1. Legal Proceedings As previously disclosed, on June 18, 2020, the Company entered into an agreement to settle an action (the “Settlement”) filed by a purported stockholder of the Company derivatively on behalf of the Company against certain directors of the Company who are members of the Dolan family and against the directors of the Company who were members of the Compensation Committee (collectively, the “Director Defendants”). Plaintiff alleged that the Director Defendants breached their fiduciary duties in connection with the 2016 and 2018 compensation packages for James L. Dolan. The Director Defendants entered into the Settlement because it will eliminate the distraction, burden, delay and expense of further litigation involving the claims to be released in the Settlement and will permit the operation of the Company without further distraction to and diversion of its directors and executives with respect to the action. After conducting an investigation, the Special Litigation Committee of the Board found no evidence that any of the Director Defendants acted in bad faith or against the best interests of the Company. The parties also agreed that the Settlement is not a presumption, concession, or admission by any of the parties of any fault, liability, or wrongdoing, or of any infirmity or weakness of any claim or defense. The court approved the Settlement on September 8, 2020 and the Settlement became effective on October 8, 2020. Under the Settlement, Mr. Dolan voluntarily relinquished a one-time equity award that the Company granted in October 2018 pursuant to his 2018 employment agreement, and the related award agreements were canceled. The Settlement also provides that (i) no future decision by the Company or MSG Entertainment, as applicable, concerning Mr. Dolan’s compensation will reinstate or compensate Mr. Dolan for the canceled awards or reinstate in Mr. Dolan’s current employment agreement the terms of Annex B to Mr. Dolan’s 2018 employment agreement, which had provided certain rights to Mr. Dolan in the event he was terminated from his employment with MSG Networks Inc. and (ii) as applicable, in connection with any negotiations with Mr. Dolan regarding his compensation, the Board of Directors or the Compensation Committee of each of the Company and MSG Entertainment will retain independent legal counsel and will continue to retain an independent compensation consultant. As part of the Settlement, the plaintiff withdrew all allegations made in the action. The Company is a defendant in various lawsuits. Although the outcome of these lawsuits cannot be predicted with certainty (including the extent of available insurance, if any), management does not believe that resolution of these lawsuits will have a material adverse effect on the Company.