Rhode Island Employees' Retirement System, Providence, is suing Pinterest Inc. executives and board members, claiming they fostered a culture of discrimination and retaliation that also hurt its financial success.
The lawsuit filed Nov. 30 in U.S. District Court in San Francisco is supported by the $2 billion Ohio Laborers' District Council and Contractors' Pension Fund, Westerville.
The $8.5 billion Rhode Island pension fund charges that Pinterest's top executives and board members "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," the complaint said.
Rhode Island Treasurer Seth Magaziner said in an emailed statement that "the Pinterest board's deference to a culture of sexism and systemic discrimination has impaired Pinterest's value and the value of the system's investment in Pinterest.
The lawsuit charges Pinterest officials, including board Chairman and CEO Ben Silbermann, co-founder and board member Evan Sharp, and Chief Financial Officer Todd Morgenfeld with breaching their fiduciary duty, wasting corporate assets, abusing control and violating proxy solicitation disclosure rules.
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Rhode Island ERS is seeking corporate governance reforms and to have Pinterest executives and board members pay for the damages related to the alleged breaches of fiduciary duties. "We are bringing this action to meaningfully reform corporate governance at Pinterest and ensure this misconduct is addressed," Mr. Magaziner said.
The lawsuit also references Pinterest's dual-class share structure. After its initial public offering in April 2019, shares held by co-founders and pre-IPO stockholders were reclassified to give them most of the voting power, which the company noted in its 2019 10-K "limits or precludes other stockholders' ability to influence corporate matters."
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