Benefits & Executive Compensation News

Fired Right After Oracle Deal, Two Sue for Lost Stock Bonanza

July 31, 2020, 5:03 PM

Oracle Corp.’s purchase of online advertising firm Grapeshot in 2018 was a chance for the software giant to tap into a digital ad market dominated by Alphabet Inc.’s Google and Facebook Inc.

It was also a golden opportunity for Grapeshot‘s top executives to cheat two new senior hires out of millions of dollars in stock options and keep the money for themselves, according to a lawsuit filed this week in federal court in Manhattan.

“The defendants’ scheme is shocking both in its brazenness and in the deceitful (and virtually scripted) manner in which they perpetrated it against each plaintiff,” according to the suit, in which the two together seek damages of more than $25 million from Oracle, former Grapeshot chief executive officer John Snyder, former chief financial officer Mark Ashworth and former chief operating officer Kurt Kratchman.

Oracle didn’t respond to calls and emails seeking comment on the lawsuit.

The world’s second-biggest software maker has expanded to internet-based, or cloud, applications and services. Grapeshot became part of an Oracle division that helps advertisers target consumers through Facebook and other platforms based on their web and offline behaviors. The “brand safety” startup, which keeps companies’ web ads from appearing on sketchy sites or next to news articles that make for awkward pairings, recruited the two managers in 2017, they said in their suit.

David Matthews, who left a $500,000-a-year job to join Grapeshot as global head of revenue, and Ashley Deibert, who left a $200,000 position, were instructed to “drive revenue and do it fast” to boost the company’s sales projections for the Oracle acquisition, according to the complaint. They claim Grapeshot lured them away from their secure and lucrative posts by touting itself as a growth story, knowing it was about to be sold to Oracle, and duped each of them in turn with the same bait-and-switch routine.

At the heart of the alleged scheme were their initial contracts, which included change-of-control provisions they’d requested so they could keep their stock options if Grapeshot was acquired, according to the suit. But shortly before the acquisition, Grapeshot pressured them into signing away the provisions, falsely claiming the clauses were the result of a “clerical error” and that no one else at the company had them, the two say.

The Oracle deal closed in May 2018 for a reported price as high as $400 million, according to the suit. The Grapeshot managers got millions of dollars to “divvy up amongst themselves,” Matthews and Deibert allege, while they were fired without cause or explanation -- before the date by which they would have earned the stock options or Oracle restricted stock substituted for the options.

The pair say they were sent packing with a severance they called a “pittance” next to the wealth they lost.

The case is Matthews v. Grapeshot Inc., 20-cv-05871, U.S. District Court, Southern District of New York (Manhattan).

--With assistance from Nico Grant.

To contact the reporter on this story:
Clare Roth in Kansas City at croth55@bloomberg.net

To contact the editors responsible for this story:
David Glovin at dglovin@bloomberg.net

Peter Jeffrey, Anthony Lin

© 2020 Bloomberg L.P. All rights reserved. Used with permission.

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