A fired chief financial officer of Coty Inc. has sued the company, accusing it of defrauding him of millions of dollars in stock options.
In addition, Michael Fishoff alleged that Coty chief executive officer Bernd Beetz quietly cashed his own options before their value could decrease.
Fishoff said in a breach of contract complaint filed in U.S. District Court in Manhattan on Jan. 22 that he was fired from the cosmetics and fragrance maker in December without cause after more than six years as cfo.
“Coty Inc. through the actions of its board of directors and most senior executives engaged in conscious and deliberate conspiracy to defraud,” stated Fishoff in the complaint.
A Coty spokeswoman said the company does not comment on pending litigation.
Fishoff’s complaint said that last September J.P. Morgan valued the company’s shares, which do not trade publicly, at $58. He alleged that Coty’s senior executives thought the price to be inflated and expected it to sink at the next semiannual assessment. Shares are distributed to executives as compensation and performance incentives, the suit said.
The complaint accused Beetz of exercising 250,000 shares of Coty stock on Oct. 31, generating $10 million, in a “surreptitious manner, designed to cloak his actions from all but a handful of people.”
Fishoff said he tried to exercise 200,000 of his own options for about $7.6 million on the last day of November — they can only be exercised on the last day of the month — which fell on a Sunday. According to the complaint, the company initially okayed the move, but on Dec. 9 the board blocked his cash-out, labeling the exercise as a December action and then declaring December a “black-out period.”
Fishoff said Beetz then fired him during a brief phone call on Dec. 11. According to the ousted cfo, the board last month learned that he planned legal action and decided to honor his option exercise, but at a value it would determine at a later date.
Fishoff is seeking the full $7.6 million and another $1.4 million he said he’s contractually owed in compensatory damages and unspecified punitive damages.
Coty named Sérgio Pedreiro, most recently of the Brazil-based América Latina Logística, to succeed Fishoff as cfo. Pedreiro started this month.
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