Teva Pharmaceutical Industries said on Wednesday it had agreed to settle a class action suit and would begin detailing the compensation it pays each of its top executives as part of that settlement. Teva also agreed to pay $1.3 million to the plaintiffs.
The world's largest maker of generic drugs said it was settling the lawsuit in order to "provide greater transparency to investors." Teva said it would include the information of salaries, bonuses and stock options for the first time in its annual report for 2013, which will be published early next year.
The settlement, which is still subject to approval by the Tel Aviv District Court, came after Sharon Hannes and Ehud Kamar, law professors at Tel Aviv University and the University of Southern California, claimed that for the past 13 years the company failed to report how much it paid its highest-ranking executives. Teva only reports the sum total of what it pays senior executive and directors.
According to the lawsuit, filed in November, Teva changed the way it reported executive compensation after regulations introduced in the year 2000 let dual-listed companies like Teva, which is traded on the Tel Aviv and New York stock exchanges, meet their Israeli disclosure requirements using U.S. regulations.
After Teva made the change, other dual-listed Israeli companies also stopped reporting individual compensation figures, the plaintiffs said in their suit.
"Teva will change its compensation disclosure practices in a significant way, Hannes and Kamar said in a statement on Wednesday, according to Bloomberg News. We expect other dual-listed companies to follow Teva and also disclose executive compensation on an individual basis.
Teva said on Wednesday that it would pay Hannes and Kamar's legal fees and other expenses of $1.1 million plus another $200,000 to the plaintiffs themselves.
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