Interpublic Sued by Former Executive Over Facebook Stake
Interpublic Group of Cos., the second-largest U.S. advertising company, was sued by a former executive demanding $381 million for his alleged role in company’s gains from the sale Facebook Inc. (FB) stock.
The executive, Ray Volpe, who served as first commissioner of the LPGA women’s professional golf tour from 1975 to 1982, accused the company of refusing to compensate him even though he had “sourced and procured” the Facebook investment for Interpublic, according to the lawsuit filed today in New York State Supreme Court in Manhattan.
Volpe claims that he brought Interpublic the opportunity to invest and form a strategic alliance with Facebook in early 2006. The advertising company invested $2.5 million in Facebook in June 2006, taking a stake of about 0.5 percent in the company’s capital stock on a fully diluted basis, according to the suit.
Interpublic sold half of its stake on the secondary market for $133.5 million in August 2011 then sold its remaining shares for about $249 million in connection with Facebook’s initial public offering in May, according to the suit.
“Thus, the value, or the realized gain, conferred on IPG by the insight, actions and persistence of Ray Volpe exceeds $380 million and is most likely in the range of $400-435 million,” lawyers for Volpe said in the suit. “Yet he has been paid nothing for these efforts.”
The suit is without merit, Tom Cunningham, a spokesman for Interpublic, said in an e-mail. Volpe was a full-time employee during the period in question and his allegations of a side deal are contradicted by his employment agreement, Cunningham said.
“The Facebook transaction was entered into at the corporate level, and the claims made by Mr. Volpe are based on self-serving, one-way e-mails sent by Mr. Volpe to IPG management after the fact, in an attempt to garner personal gain from a very successful commercial decision taken by IPG,” Cunningham said. “The claim that IPG would act as his bank on this transaction is absurd, and wholly inconsistent with how we do business.”
The case is Volpe v. Interpublic Group of Cos., 652308/2012, New York State Supreme Court (Manhattan).
To contact the reporter on this story: Chris Dolmetsch in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Michael Hytha at email@example.com