The founder and CEO of advertising technology OpenWeb’s Nadav Shoval obtained a temporary injunction against OpenWeb after the company abruptly ousted him on September 9, according to public documents obtained by ADWEEK.
His surprising dismissal sparked significant intrigue, as Shoval founded OpenWeb in 2012, is the sole CEO of its American subsidiary and owns 7% of its shares, according to court documents.
When OpenWeb emailed its employees on September 11 to tell them that President Tim Harvey would replace Shoval, Shoval sent a company-wide email in response, saying he had no plans to resign.
“The Board of Directors falsely stated that I was stepping down from my role as CEO,” Shoval wrote. “Let me be clear: this is not true and it is not my intention. »
This latest legal development, published on October 10, temporarily freezes any effort by OpenWeb to fire Shoval until a hearing can be held on October 28. The suit was filed in Israel, where OpenWeb was incorporated.
In the decision, Judge Ariel Zimmerman asked OpenWeb to “refrain from completing any steps related to and projecting on [Shoval]which were discussed at the October 9 meeting, including the dismissal of the petitioner.
The temporary injunction marks the latest twist in a stunning turn of events for OpenWeb, which was recently valued in October 2022 at $1.5 billion after raising $170 million in Series F funding. The company moderates the comments section of websites and runs contextual advertising alongside them. OpenWeb investors include Samsung and the New York Times.
In the lawsuit, Shoval alleges that he was the target of a coup staged by several members of OpenWeb’s eight-person board of directors.
In particular, it alleges that two board members – Jeff Horing of Insight Partners and Margaret Wu of the Georgian Council – organized a meeting on September 6 to remove Nadav from his position in order to take control of the company.
Shoval claims this meeting was not improperly called because neither he nor CFO Haim Sasson were present. Its results are therefore legally void, according to the lawsuit.
OpenWeb and Insight Partners declined to comment on the matter. Georgian did not respond to a request for comment.
However, a report from Israeli publication The Marker attributed the board member’s decision to fire Shoval to concerns about his “conduct on a professional and personal level – in the management of the company and due to the problematic behavior he has repeatedly demonstrated.”
Harvey also addressed the controversy in an internal memo to employees on October 12, obtained by ADWEEK.
“Over the past few days, several articles have been written regarding the ongoing disputes between the OpenWeb board of directors and former CEO Nadav Shoval,” Harvey wrote. “It is unfortunate that internal company matters are being made public, and I am deeply sorry for the noise and stress this may add to your already busy days. »
The fate of the company and the outcome of the lawsuit could affect the broader media ecosystem. OpenWeb works with more than 3,000 publishers, including CNN, The Wall Street Journal, NewsCorp., Yahoo and Fox News. These publishers generate revenue, as well as on-site engagement, through their relationship with OpenWeb, which could be jeopardized if the company experiences a leadership crisis.
Shoval’s ouster and subsequent trial
According to the lawsuit, the controversy began this summer when OpenWeb’s board of directors made several changes to Shoval’s role as CEO, including a change that required Shoval to report to the board’s chairman instead. than on the board of directors.
Shoval opposed the change, which he said hampered his management abilities, and he submitted a formal objection on September 5.
The board then used the objection note as a pretext to oust him by interpreting it as a letter of resignation, Shoval claims in court documents. However, Shoval disputed this interpretation, pointing to the wording of the memo which reads: “For the avoidance of doubt, this notice does not constitute a resignation from my employment with the company.” »
In the lawsuit, Shoval alleges that the directors were motivated by a desire to serve the shareholders who appointed them — venture capital firms Insight Ventures and Georgian — rather than honor their obligations to OpenWeb.
“The dismissal decision [Nadav] and the appointment of a temporary CEO are part of a plan to remove him from the company, with the aim of acquiring his shares at a low price,” according to the lawsuit.
As part of the lawsuit, Shoval sought the removal of two of the board members he appointed – Omer Cygler, managing partner at Lion Investment Partners, and Scott Galloway, a marketing professor and entrepreneur – and replace them with Ron Zuri and Mark Frons.
He also demanded that any decisions made after his controversial ouster be reversed, thereby rewinding any action or decision taken by the management team.
The injunction Shoval obtained from Judge Zimmerman prevents the board from taking further action until the Oct. 28 hearing.
