DEFA14A: Fidelity National Financial Urges Nevada Redomestication Citing Steep Delaware Litigation Costs

Fidelity National Financial, Inc. (FNF) has filed supplemental proxy materials urging stockholders to approve its redomestication to Nevada, citing new academic research that highlights significantly higher attorney fees awarded in Delaware courts compared to federal courts.

Summary

• Fidelity National Financial, Inc. (FNF) has issued a Definitive Additional Materials (DEFA14A) filing to supplement its Definitive Proxy Statement for the 2025 Annual Meeting of Stockholders.
• The primary purpose of this supplemental filing is to strongly encourage stockholders to vote FOR Proposal 2, which seeks approval for the redomestication of the Company from the State of Delaware to the State of Nevada by conversion.
• FNF supports this proposal by referencing recent academic research dated May 14, 2025, titled 'Lodestar Multipliers in Delaware and Federal Attorney Fee Awards' by Joseph Grundfest, a former SEC Commissioner and Stanford University professor.
• The research provides evidence that attorney fee awards with multipliers of seven or more (septuples) are 23.35 times more frequent in Delaware than in federal court, and awards with multipliers of ten or more (decuples) are 57.07 times more frequent in Delaware.
• Delaware courts have generated almost as many septuples as the entire federal system (87.0%) and almost triple the number of decuples (280%).
• The maximum awarded multiplier in Delaware is 66, which is almost four times (3.86x) the federal maximum of 17.1.
• Adjusted for inflation and weighted by dollar value, the average Delaware septuple award compensates plaintiff attorneys at a rate of $25,767/hour, which is 3.80 times the comparable federal average of $6,777/hour.
• For decuples, the adjusted Delaware average award compensates plaintiff attorneys at a rate of $26,094/hour, or 3.85 times the comparable federal rate of $6,785/hour.
• FNF believes this research supports their view that redomestication to Nevada will result in significant financial benefits, including potential cost savings in litigation expenses, particularly attorney fees.
• The Board of Directors and management continue to strongly support the redomestication, believing it is in the best interests of FNF and its stockholders.
• Stockholders can change their vote at any time before the 2025 Annual Meeting, scheduled for June 11, 2025, at 10:00 a.m. (Eastern).

Sentiment

Score: 8

Explanation: The document conveys a strong positive sentiment regarding a strategic corporate governance change aimed at reducing future operational costs. The proactive measure, backed by specific academic research and quantitative data on potential savings, indicates a well-reasoned and beneficial decision for the company and its shareholders.

Positives

• The proposed redomestication to Nevada is expected to result in significant financial benefits for FNF, primarily through potential cost savings in litigation costs, including attorney fees.
• New academic research by Joseph Grundfest provides strong evidence of substantially higher attorney fee awards in Delaware courts compared to federal courts, supporting the rationale for redomestication.
• Delaware's attorney fee awards with multipliers of seven or more are 23.35 times more frequent than in federal court, and those with multipliers of ten or more are 57.07 times more frequent, indicating a clear financial advantage to moving.
• The average inflation-adjusted hourly compensation for plaintiff attorneys in Delaware for high-multiplier awards is significantly higher (e.g., $25,767/hour for septuples) compared to federal courts ($6,777/hour), suggesting substantial savings potential.
• The Board of Directors and management are unified in their strong support for the redomestication, indicating a clear strategic direction.

Negatives

• Remaining incorporated in Delaware could expose Fidelity National Financial to significantly higher litigation costs, particularly in terms of attorney fees, as evidenced by the academic research.
• Delaware courts have a much higher frequency and magnitude of large attorney fee awards (septuples and decuples) compared to federal courts, implying a greater financial risk for companies domiciled there.

Risks

• Risk of incurring substantially higher litigation costs, particularly attorney fees, if the company remains incorporated in Delaware, as highlighted by the academic research on 'lodestar multipliers'.

Future Outlook

Fidelity National Financial anticipates significant financial benefits and potential cost savings in litigation expenses, particularly attorney fees, by redomesticating from Delaware to Nevada. This strategic move is expected to reduce the company's exposure to the higher attorney fee awards prevalent in Delaware courts.

Management Comments

• "We believe this is consistent with our Proxy Statement which indicates that redomestication from Delaware to Nevada will result in significant financial benefits including potential cost savings in litigation costs, including attorneys fees, which can be significant for corporate litigation."
• "Our Board of Directors and management continue to strongly support redomestication to Nevada and believe it to be in the best interests of FNF and its stockholders."
• "For the reasons detailed in the foregoing discussion, in our Proxy Statement and in our supplemental materials filed with the SEC on May 30, 2025, we respectfully ask you to vote FOR Proposal 2."

Industry Context

This announcement highlights a growing trend among corporations to re-evaluate their state of incorporation, particularly in light of evolving legal landscapes and associated costs. Delaware has historically been a preferred state for incorporation due to its well-developed corporate law and specialized court system (Court of Chancery). However, the research presented by FNF suggests that the financial implications of litigation, specifically attorney fees, in Delaware may be prompting companies to consider alternative domiciles like Nevada, which offers a different legal and regulatory environment. This move could set a precedent or encourage other companies to similarly assess their corporate domicile strategy based on cost-benefit analyses of litigation environments.

Comparison to Industry Standards

• The document directly compares the legal environment of Delaware courts to federal courts, highlighting significant disparities in attorney fee awards.
• Delaware courts generated 20 septuples (multipliers of 7x or more) and 14 decuples (multipliers of 10x or more), while the entire federal system generated 23 septuples and 5 decuples, indicating Delaware's disproportionate share of high-multiplier awards.
• Over the most recent five-year period (2000-2025), septuples were 23.35 times more frequent in Delaware than in federal court, and decuples were 57.07 times more frequent.
• The maximum awarded multiplier in Delaware (66) almost quadruples (3.86x) the federal maximum (17.1).
• The average inflation-adjusted hourly rate for plaintiff attorneys in Delaware for septuple awards ($25,767/hour) is 3.80 times higher than the comparable federal average ($6,777/hour).
• For decuple awards, the average adjusted Delaware rate ($26,094/hour) is 3.85 times higher than the comparable federal rate ($6,785/hour).
• The research points out that two members of the Delaware Court of Chancery generated a significant majority of these high-multiplier awards (55% of septuples and 64.3% of decuples), suggesting a concentrated source of these higher costs.

Corporate Governance

Stakeholder Impact

• Shareholders: Potential for increased shareholder value through reduced future litigation costs and improved financial efficiency.
• Management: Demonstrates proactive strategic decision-making aimed at optimizing corporate structure and reducing operational risks.
• Company Operations: Expected to benefit from a more favorable legal environment regarding litigation expenses.

Next Steps

• Stockholders are requested to vote FOR Proposal 2 regarding the redomestication to Nevada.
• The 2025 Annual Meeting of Stockholders will be held on June 11, 2025, at 10:00 a.m. (Eastern), where Proposal 2 will be voted upon.

Key Dates

Recommendation

Keywords

Fidelity National Financial, FNF, redomestication, Nevada, Delaware, corporate governance, proxy statement, attorney fees, litigation costs, SEC filing, shareholder vote, corporate domicile