Chris A. Davis, the former chairman of the 24 Hour Fitness Worldwide Inc. gym chain, sued the company for $23 million, contending she’s owed payments for a promised “phantom stock” award.
Davis, of West Palm Beach, Florida, said she has served the company faithfully as a board member since 2006, and as a result of circumstances including the cost of commuting and renting an apartment, she’s “impoverished” and was depending on the award from the San Ramon, California-based firm, a unit of Forstmann Little & Co., which isn’t named in the suit.
Davis “has demanded payment in full, but defendant has refused to make payment,” which she “believes exceeds $23 million,” her lawyers said in a complaint filed yesterday in federal court in Wilmington, Delaware.
The lawyers said in court papers that Davis’s award might soon be worth more, because 24 Hour Fitness “is currently actively seeking a buyer,” which could boost its value.
They said the company wrote to Davis in September advising her the award “is not a valid obligation of the company.”
A phantom stock award is a long-term benefit plan in which the recipient holds the rights to the value of shares, not the actual shares, until payout.
Forstmann, based in New York, bought 24 Hour Fitness in 2005 as the world’s largest fitness center company, it said in a statement at the time.
Wendy Yellin, a spokeswoman for 24 Hour Fitness, didn’t immediately return a phone call and e-mail seeking comment on the lawsuit.
The case is Davis v. 24 Hour Fitness, U.S. District Court, District of Delaware (Wilmington).