Elton v. Kramer, et al., Case No. C-15-CV-21-000496 (Md. Cir. Ct.-Montgomery Cnty.). On August 7, 2025, The Hon. Deborah L. Boardman granted final approval of a shareholder derivative settlement which resolved claims brought on behalf of and for the benefit of Emergent BioSolutions Inc. (“Emergent” or the “Company”) by shareholders in several different jurisdictions. Johnson Fistel served as co-lead counsel in the Maryland state court action.
The Derivative Actions centered on claims that the Individual Defendants, each a current or former officer or director of nominal defendant Emergent, breached their fiduciary duties of loyalty and care to the Company by failing to address endemic regulatory non-compliance that resulted in the termination of Emergent’s contracts to manufacture COVID-19 vaccine bulk drug substance as part of the U.S. government’s “Operation Warp Speed” pandemic response and brought the Company to the brink of insolvency. The Settlement’s substantial monetary and non-monetary benefits will help Emergent to reset the compliance foundation for its core business and to restore its credibility with regulators, customers, manufacturing partners, creditors, and investors.
In connection with the Settlement, Defendants’ insurers will make an immediate cash payment to Emergent of $15 million—the full amount remaining on the applicable ABC Directors and Officers insurance policies. In addition, Emergent’s Board of Directors (the “Board”) will adopt and oversee the implementation and operation of a comprehensive package of corporate governance reforms (the “Reforms”) tailored to address the oversight lapses and internal controls deficiencies Plaintiffs contend left the Company unable to demonstrate compliance with U.S. Food and Drug Administration (“FDA”) drug manufacturing standards.
The Reforms include: (i) enhancements to the Board’s Quality, Compliance, Manufacturing and Risk Management Committee’s supervisory responsibilities, reporting and review procedures, and resources for facilitating Board oversight of manufacturing quality and regulatory compliance, including through direct supervision of senior management in the Company’s Quality Ethics and Compliance organization; (ii) rigorous new management-level monitoring, reporting, and escalation protocols and internal controls enhancements; (iii) enhanced facilities-level compliance incident report, evaluation, and response protocols; (iv) mandatory training for directors, officers, employees, and contractors in manufacturing and compliance risk assessment and response; (v) mandatory annual public reporting of material compliance and regulatory issues; (vi) amendments to the Compensation Recovery Policy linking executive compensation incentives to quality, compliance, and risk management metrics, and providing for recoupment of excess incentive compensation paid to executive officers on the basis of restated results, without regard to fault, and broader recoupment in circumstances involving executive misconduct; and (vii) new rules governing approval of Rule 10b5-1(c)(1) trading plans designed to ensure that stock awards align executive incentives with long-term stockholder interests. In addition, Emergent acknowledges that Plaintiffs’ litigation efforts were material to the Board’s decision to refresh its membership with four new directors and to hire two new, highly qualified executives in the positions of Executive Vice President, Quality Ethics and Compliance and Senior Vice President, Chief Ethics and Compliance Officer, who will play a central role in implementing and ensuring compliance with the Reforms.
Indeed, Professor Daniel J. Morrissey, an expert in securities law and corporate governance, opined that the Reforms will confer economic value many times greater than the $15 million monetary recovery. As Professor Morrissey explained in connection with the Settlement approval process, the reforms are “targeted to the alleged wrongdoing[,] … effectively address the underlying alleged misconduct[,]” and will materially reduce the risk of future compliance-related losses, substantially improve the Company’s chances of securing new business, and restore the confidence of regulators and investors in the Company’s ability to manufacture safe and effective vaccines.
Attorneys Michael I. Fistel, Jr., William W. Stone, and Anthony E. Mance led the prosecution of the litigation for Johnson Fistel and, along with co-counsel, helped to achieve this excellent result on behalf of Emergent and its shareholders.
