Current and former employees of Tinder, including three of the dating app’s founders, on Tuesday sued its parent company IAC and subsidiary Match Group for $2 billion in damages, alleging the company deliberately blocked employees from exercising stock options and misled them about the app’s valuation.
The 10 employees claim they were given four specific dates in 2017, 2018, 2020 and 2021 in which they could seek a valuation of the company and exercise their stock options for sale.
However, they allege that IAC took steps in 2017 to dilute the value of the stock options by valuing the Tinder brand at $3 billion, far below its purported worth, and merging the app with Match Group, IAC’s dating services arm.
“This is an open-and-shut case. The defendants made contractual promises to recruit and retain the men and women who built Tinder. The evidence is overwhelming that when it came time to pay the Tinder employees what they rightfully earned, the defendants lied, bullied, and violated their contractual duties, stealing billions of dollars,” the lawsuit alleges.
During an earnings call earlier this month, IAC disclosed that Tinder would earn a projected $800 million in 2018, a figure the plaintiffs allege is 75% higher than IAC projected in its 2017 valuation of the company. The plaintiffs claim that Tinder’s merger with Match Group occurred without approval from Tinder’s existing board of directors, adding that the realignment helped IAC to “extinguish” stock options.
The plaintiffs include Tinder’s co-founder and former CEO Sean Rad, as well as current vice president of finance James Kim, chief strategy officer Jonathan Badeen and vice president of marketing Rosette Pambakian.
In a statement, IAC dismissed the suit’s allegations as “meritless” and said the company has paid out more than $1 billion in compensation to Tinder’s founders and employees.
“With respect to the matters alleged in the complaint, the facts are simple: Match Group and the plaintiffs went through a rigorous, contractually -- defined valuation process involving two independent global investment banks, and Mr. Rad and his merry band of plaintiffs did not like the outcome,” the statement said.
IAC shares were flat in trading Tuesday.