A lawsuit was filed by an investor in Cloudflare, Inc. (NYSE:NET) shares over alleged wrongdoing at Cloudflare.
San Diego, CA -- (SBWIRE) -- 04/21/2022 -- An investor in Cloudflare, Inc. (NYSE: NET) shares filed a lawsuit against the board of directors of Cloudflare, Inc. in effort ot block a June 2nd vote on Cloudflare's incentive plan for a 10-year award of stocks to certain Cloudflare founders.
Investors who purchased shares of Cloudflare, Inc. (NYSE: NET) and currently hold NYSE: NET long-term, have certain options and should contact the Shareholders Foundation at email@example.com or call +1(858) 779 - 1554.
The plaintiff alleges that the founders decided "to effectively blackmail their own boards of directors" into handing out huge grants of stock and that the board of directors is breaching its fiduciary duty by concealing material information ahead of the shareholder vote.
The plaintiff says that the directors of CloudFlare, Inc are seeking approval from investors for proposed founder packages and separate compensation awards for non-founders. The plaintiff says that if approved those "patently unfair" "mega-grant" plans would grant founders Matthew Prince and Michelle Zatlyn stock worth of up to $3.35 billion, each.
The plaintiff claims that Prince and Zatlyn risk diluting their positions if they convert those shares to regular, marketable Class A stock and "rather than sell off Class B shares and put their control at risk, Prince and Zatlyn decided to effectively blackmail their own boards of directors into giving them new stock grants worth billions of dollars of Class A stock".
The plaintiff also accuses Prince and Zatlyn of working with the company's compensation consultant to advise a director compensation committee that CloudFlare's current equity compensation is inadequate, and that awards based on comparable-sized businesses alone would fall short of a "meaningful source of motivation." The plaintiffs says that "perhaps there will come a point when a board or compensation committee actually stands up to one of these founders".
Those who purchased shares of Cloudflare, Inc. (NYSE: NET) have certain options and should contact the Shareholders Foundation.
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