Progyny, Inc. Announces Settlement of Derivative Action Challenging Director Compensation

Key Points and Summary

• Settlement Notice Issued: On March 13, 2026, Progyny, Inc. issued a Notice of Pendency of Settlement of Derivative Action, following a settlement agreement with a shareholder who brought an action against the company regarding historical compensation practices for its non-employee directors.
• Legal Action Background: The lawsuit, filed by shareholder Alex Regensberg in the Supreme Court of the State of New York (New York County), alleged that since 2020, Progyny’s board approved and awarded excessive and improper compensation to non-employee directors, particularly in comparison to peer companies.
• Defendants: The legal action named as defendants various current and former directors, including Pete Anevski, David Schlanger, Fred E. Cohen, Lloyd Dean, Kevin Gordon, Roger Holstein, Jeff Park, Norman Payson, Cheryl Scott, and Beth Seidenberg, with Progyny as the nominal defendant.
• Settlement Terms: As part of the settlement, Progyny agreed to implement significant corporate governance reforms, notably a new director compensation policy that sets meaningful limits on compensation for non-employee directors.

Details of the Settlement and Corporate Governance Reforms

• Director Compensation Limits: The new policy, to be adopted within 10 business days of the effective date and maintained for at least four years, provides:
  • Annual cash award per non-employee director capped at \$48,000 (\$40,000 cash retainer + \$8,000 for committee service).
  • Annual equity award per non-employee director capped at \$240,000.
  • Total annual award not to exceed \$288,000 per non-employee director.
  • Directors may elect to receive their cash award as stock options.
  • The equity award can be either 100% Restricted Stock Units (RSUs) or 75% RSUs and 25% stock options.
  • No supplemental equity grants for newly elected non-employee directors.
  • Committee chairs may receive additional annual cash awards: Audit (\$5,000), Compensation (\$20,000), Nominating and Corporate Governance (\$15,000).
  • Lead Independent Director entitled to an annual cash award of \$40,000.
  • No other compensation for non-employee directors for board service.
• Release of Claims: Upon effectiveness, all claims related to director compensation from January 1, 2020 through the effective date, including any policies, plans, or decisions, will be released. This release covers all current and future claims by shareholders or parties acting on behalf of Progyny.
• No Direct Payment to Shareholders: Since this is a derivative action brought for the benefit of Progyny, any monetary benefit or recovery will go to the company, not directly to shareholders. No claims form is required.
• Court Approval Required: The settlement is contingent on approval by the Supreme Court of the State of New York.
• Settlement Hearing: The Court has scheduled a virtual Settlement Hearing for May 28, 2026 at 11 a.m. on Microsoft Teams. Shareholders may attend and object, provided they submit documentation at least 10 calendar days before the hearing.
• Legal and Financial Implications: Plaintiff and Plaintiff’s counsel will seek a fee and expense award of \$475,000, subject to court approval. Defendants continue to deny the allegations and admit no wrongdoing.

Potential Impact for Shareholders and Investors

• Price Sensitivity: The settlement brings an end to a legal challenge regarding director compensation, which could have had reputational and financial implications for Progyny. The new compensation limits are likely to be viewed positively by governance-focused investors, and may enhance Progyny’s standing among institutional shareholders.
• Corporate Governance Signal: The reforms and explicit compensation caps provide greater transparency and accountability, potentially reducing risk of future shareholder litigation and aligning Progyny’s practices with peer companies.
• No Immediate Financial Payout: While shareholders do not receive a direct payout, the company benefits from the settlement, which may support sustained investor confidence and possibly affect future share value, especially if the market interprets the reforms as improving long-term governance and stability.
• Legal Costs: The one-time legal fee and expense payment is not material relative to Progyny’s market capitalization, but investors should note this as a non-recurring expense.

Actions Shareholders Can Take

• Shareholders who wish to contest the settlement or the fee award must file objections and supporting documentation with the court and serve counsel at least 10 days before the May 28, 2026 hearing.
• If shareholders do not object, no action is required.

Conclusion

The resolution of this derivative action marks a significant step for Progyny, Inc. in addressing shareholder concerns regarding director compensation. Implementation of new compensation limits and enhanced corporate governance is likely to be viewed favorably by investors, possibly improving the company’s risk profile and market perception. While no cash is paid directly to shareholders, the reforms may positively impact the company’s long-term value and attractiveness to institutional investors.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own analysis or consult professional advisors before making any investment decisions. The information presented is based on official filings and court documents, and future events or decisions by the court may alter the outcomes or impact on Progyny, Inc.

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