Cloudflare Sued Over $3.4 Billion ‘Mega-Grants’ to Co-Founders

A Cloudflare Inc. investor sued it in Delaware, claiming its board is concealing critical details ahead of a shareholder vote on “unprecedented mega-grants” of stock to co-founders Matthew Prince and Michelle Zatlyn that are worth up to $3.35 billion each.

The lawsuit, docketed Thursday, accuses the founders of deciding “to effectively blackmail their own boards of directors” into handing out huge grants of stock—triggered at various stock price thresholds—so long as they “maintain certain titles,” without imposing any actual performance-based conditions.

The “patently unfair” equity awards “could be the mega-grant” at a major tech company “that finally causes a stockholder ...