ATTENTION: To all shareholders of Pinterest, Inc. common stock as of November 23, 2021, please be advised that the final settlement hearing is presently scheduled for May 26, 2022 at 8:00 a.m. PST/11:00 a.m. EST.
Because the Settlement involves the resolution of derivative actions, which were brought on behalf of and for the benefit of the Company, and not individual or class actions on behalf of Pinterest shareholders, the benefits from the Settlement will go to Pinterest. Individual Pinterest stockholders will not receive any direct payment from the Settlement. ACCORDINGLY, THERE IS NO PROOF OF CLAIM FORM FOR STOCKHOLDERS TO SUBMIT IN CONNECTION WITH THIS SETTLEMENT. STOCKHOLDERS ARE NOT REQUIRED TO TAKE ANY ACTION.
On February 17, 2022, Judge William Alsup of the United States District Court for the Northern District of California granted preliminary approval of a $50 million settlement between Pinterest, Inc. (NYSE: PINS) and its shareholders in In re Pinterest Derivative Litigation, Lead Case No. 3:20-cv-08331-WHA. The final approval hearing is currently scheduled for May 26, 2022.
As the court-appointed Interim Lead Counsel, Cohen Milstein represents Lead Plaintiff and Cohen Milstein client, Employees’ Retirement System of Rhode Island (“ERSRI”) and other shareholders, in this consolidated shareholder derivative action.
The settlement is the first of its kind to embrace diversity goals around a company’s product. It also requires Pinterest to commit $50 million to a holistic set of workplace and Board-level reforms designed to protect employees from discriminatory treatment and to promote diversity, equity, and inclusion (DEI) throughout its workplace and product.
Key requirements of the settlement include:
- Release of former employees from non-disclosure agreements (NDAs) who want to discuss the facts of their mistreatment;
- The Audit Committee of the Board of Directors of Pinterest will be responsible for the implementation and oversight over certain reforms designed to create equal opportunities for employees;
- A Board member will act as a co-sponsor with the CEO for diversity, equity, and inclusion initiatives, which will help ensure accountability exists for Pinterest’s top executives;
- The Company will conduct external bi-annual pay equity audits that review performance ratings, promotions and compensation across gender and racial categories; and
- Diversity reports to shareholders will describe progress made in implementing pay equity and DEI goals.
The settlement also requires enhancements to Pinterest’s recruiting, hiring, and training. Combined, these reforms will substantially increase the value of the company for its investors and help ensure its continued future growth, as well as improving the workplace experience for Pinterest’s employees.
“We pushed for these sweeping reforms to support Pinterest's employees with a fair and safe workplace, and to strengthen the company's brand and performance by ensuring that the values of inclusiveness are made central to Pinterest's identity. This holistic approach will fundamentally support and positively impact Pinterest’s workplace culture in the years to come,” said Rhode Island General Treasurer Seth Magaziner, who acted on behalf of Lead Plaintiff, Employees Retirement System of Rhode Island.
Originally filed by Cohen Milstein on November 30, 2020, Plaintiffs brought this shareholder derivative action against certain current officers and directors of Pinterest, including Board Chairman and Chief Executive Officer Ben Silbermann, Co-Founder and Board member Evan Sharp, and Chief Financial Officer Todd Morgenfeld, for breaches of fiduciary duty, waste of corporate assets, abuse of control, and violation of Section 14(a) of the Exchange Act.
This case stems from Pinterest’s alleged systematic culture, policy, and practice of illegal discrimination on the basis of race and sex, from at least February 2018 through the present. Pinterest’s top executives and members of its Board of Directors personally engaged in, facilitated or knowingly ignored the discrimination and retaliation against those who spoke up and challenged the Company’s White, male leadership clique. As a result of Defendants’ illegal misconduct, the Company’s financial position and its goodwill and reputation among its largely female user base (which Pinterest’s success depends upon) were harmed and continue to be harmed.
Plaintiffs sought, among other things, to obtain injunctive relief, including corporate governance reforms, and obtain other relief on behalf of Pinterest and against the individual Defendants for breaches of fiduciary duties and violations of Section 14(a) related to the actions and inactions detailed in the complaint.
Pinterest (NYSE: “PINS”) is an online visual discovery engine people use to find lifestyle inspiration, including recipes, home and style ideas, travel destinations and more. Pinterest launched in 2010 and has hundreds of millions of monthly active users around the world.
Over the summer of 2020, three female senior executives at Pinterest, two of whom are Black, exposed the hypocrisy of the Company that bills itself as the “nicest place on the Internet.” Pinterest held out highly competent women executives Ifeoma Ozoma, Aerica Shimizu Banks, and Francoise Brougher as examples of the Company’s dedication to workplace equity and inclusion. But behind the scenes, as Brougher pointedly remarked after her discriminatory firing, “Pinterest’s female executives, even at the highest levels, are marginalized, excluded, and silenced.”
Pinterest’s hostile work environment was first exposed in June 2020 by Ozoma and Banks. They revealed that they were underpaid relative to a White, male colleague and then retaliated against after seeking equal pay and leveling. The Company ignored their warnings of an imminent doxxing attack, thereby endangering Ozoma and other employees, and subjected Ozoma, Banks, and close colleagues to invasive investigations designed to frame Ozoma and Banks.
Two months later, Francoise Brougher (“Brougher”) filed her own lawsuit against the Company claiming gender discrimination and retaliation. Brougher was Pinterest’s top female executive and the Company’s first Chief Operating Officer. Brougher alleged, among other things, that she was underpaid relative to similarly situated male executives and that due to her sex, male executives intentionally excluded her from essential job duties, including public meetings in advance of Pinterest’s April 2019 initial public offering (“IPO”) and post-IPO Board meetings. After speaking up, she was fired by CEO Ben Silbermann.
On August 14, 2020, outraged Pinterest employees staged a virtual walkout, demanding greater transparency in compensation and increased diversity among Pinterest’s senior leadership. The employees made clear that Ozoma, Banks, and Brougher’s discriminatory experiences were “not isolated cases… Instead, they are representative of an organizational culture that hurts all Pinterest workers.”
Operative case name: In re Pinterest Derivative Litigation, Lead Case No. 3:20-cv-08331-WHA, United States District Court for the Northern District of California, San Francisco Division