(Bloomberg Law) — Billionaire Peter Thiel and his co-founders of Palantir Technologies Inc. in Delaware on Friday backfired on claims that their “class F” shares — a “flexible” voting value modified to give them 49.99% control over any decision — illegally made them the “emperor for life.” ‘ from the company.
Chairman of the board Thiel, CEO Alexander Karp, president Stephen Cohen and the company filed a lawsuit in the Chancery Court in Delaware, defending rather than denying the supervoting shares. They have not previously attempted to dismiss the case without discovery, as most defendants do.
While the proposed shareholder class action attacks the class F shares for giving “a certain percentage of the voting rights to the founders personally”, rather than granting the voting rights per share, it does not violate any provision of the statute or the law. bylaws of the company, according to the motion.
Palantir’s capital structure “reflects the fundamental flexibility that is at the heart of Delaware’s corporate law,” the filing said. “A corporate charter may contain any provision that does not conflict with the law,” and there is “no prohibition against linking rights to the identity of particular holders,” it adds.
According to the co-founders, the class F shares were approved by a majority of Palantir’s other investors when the company went public via direct listing last year.
The arrangement is one of a kind with others who have gathered for years, such as a provision guaranteeing 40% vote control from Ford Motor Co. to the Ford family since its stock market debut in 1956, the motion said.
The claim that the stock is reverse-engineered to have 49.99% power over any vote, “as if by magic,” is little more than a “raft of hyperbole,” according to the filing.
Even if the “attacks had legal value, under no circumstances” would the “entire Class F structure” — as the lawsuit asks — be “the proper remedy,” the motion says. “The proper remedy would not be to attack the charter with a battle axe, but to wield a scalpel instead.”
Palantir is represented by Wilson Sonsini Goodrich & Rosati PC. The founders are represented by Potter Anderson & Corroon LLP and Cravath Swaine & Moore LLP. The plaintiff is represented by Bernstein Litowitz Berger & Grossmann LLP, Saxena White PA and Friedman Oster & Tejtel PLLC.
The case is In re Palantir Techs. Inc. Class F Stock Litig., Del. Ch., no. 2021-0275, motion for summary judgment filed on 7/23/21.
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