Driverless car
Source: Zoox
Two shareholders in self-driving car startup Zoox have sued the company, alleging that a rival bid would have been better for common stockholders than a $1.3 billion offer from Amazon announced in June.
The lawsuit in the Delaware Court of Chancery filed August 18 but publicly released on Wednesday alleges that the Amazon deal created disproportionate rewards for executives and investors holding preferred shares at the expense of common stockholders.
Reuters reported last month that Amazon planned to create $100 million in restricted stock awards to retain Zoox’s employees alongside a $125 million cash “transaction bonus pool” paid out in proportion to shares for current employees.
In the complaint, James Wei and Yanxin Zhang, two former employees who are common stockholders, alleged that those rewards “dwarfed” the proceeds that will be available to common stockholders, including employees who put in years at the company but left before May 2020. Zoox was founded in 2014.
The two allege that a competing offer to purchase Zoox made after the company had signed an exclusivity agreement to negotiate with Amazon but before the two had reached a deal was “actually more favorable to Zoox common stockholders than the (Amazon) Acquisition” because of how much of the deal was diverted to executive bonuses and other compensation.
Reuters previously reported that Cruise, the self-driving company backed in part by General Motors, Honda Motor and SoftBank, had stepped in to make a $1.05 billion offer to purchase Zoox.
Wei and Zhang are asking the court to order Zoox to open its books “in order to determine whether it is appropriate to pursue litigation against all or some members of the Board and/or Company management or others based on the apparent wrongdoing in connection with the Acquisition.”
Zoox, Wei and Zhang did not immediately return requests for comment.
