The suit was filed in California federal court on Monday after allegations from high-profile executives, including Pinterest’s former Chief Operating Officer.
Shareholders of Pinterest are suing members of the company’s board of directors and several top executives for allegedly ignoring or deliberately enabling discrimination against women and people of color.
The suit claims that the board of directors, including Pinterest cofounders Ben Silbermann and Evan Sharp, either actively perpetrated or knowingly ignored high-profile allegations of discrimination and retaliation against Pinterest’s former COO Francoise Brougher and two Black female executives, Ifeoma Ozoma and Aerica Shimizu Banks. Pinterest did not respond to a request for comment.
The suit singles out Pinterest board chair, cofounder, and CEO Silbermann in particular for creating a boys’ club at the top that systematically ignored claims of pay disparity and an inability to advance for women and people of color. In addition, it alleges that even when employees told Silbermann about Pinterest’s problems, he did nothing to change the situation. “He repeatedly placed himself before the Company, surrounding himself with yes-men and marginalizing women who dared to challenge Pinterest’s White, male leadership clique,” the suit reads.
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This new lawsuit claims that the board’s and executives’ actions have resulted in a breach of fiduciary duty, waste of corporate assets, and abuse of control. In addition, the suit alleges that the defendants violated federal securities laws, on the grounds that the board presented a “false and misleading” Proxy Statement in 2020 to the SEC that did not disclose that Brougher was being paid differently than other executives or explain why she left Pinterest.
In all, the lawsuit alleges that the executives and the board have hurt Pinterest financially, in part because the company now has damaged its reputation with current employees, future talent, and with its predominantly female users. Several Fast Company stories are cited as evidence in the lawsuit.
“As a result of Defendants’ illegal misconduct, the Company’s financial position and its goodwill and reputation among its largely female user base (upon which Pinterest’s success depends upon) were harmed and continue to be harmed,” reads the suit, which was filed Monday in United States District Court in Northern California.
The plaintiff, the Employees’ Retirement System of Rhode Island, oversees more than $8.5 billion in assets and has owned Pinterest stock as of June 26, 2020. Other defendants include Jeff Jordan of Andreessen Horowitz and Jeremy Levine of Bessemer Venture Partners, both of whom are investors in Pinterest and sit on the company’s board, as well as Todd Morgenfeld, Pinterest’s chief financial officer.
“I’m glad that [the plaintiff’s lawyers] Cohen Milstein is pursuing this on behalf of the clients but even if it’s successful there still needs to be justice for me and Aerica and the other people who have been harmed by the behavior of Pinterest managers and executives who are still on the job,” Ozoma says.
Shareholder derivative lawsuits have been used in many instances to hold corporate executives accountable for their own misconduct. That includes a recent spate of shareholder suits against Google parent company Alphabet for its handling of sexual harassment claims. In September, Alphabet settled the suits by agreeing to set up a $310 million fund for diversity and inclusion programs over the next 10 years and to end the practice of forced, private arbitration during disputes.
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