Apple is said to be acquiring Beats for $3.2 billion. The deal was rumoured to be closing this week, but it was pushed back to next week (or later). What’s interesting, however, is that David Hyman, the founder of MOG, an online music subscription service, is suing Beats and seeking compensatory damages “in excess of $20 million” plus interest, reports The Wrap.
MOG was acquired by the Dr. Dre- and Jimmy Iovine-founded Beats Electronics for $14 million in May 2012. The music service Hyman dreamed of is now called Beats Music.
The problem is that Hyman says he was fired before could receive the benefits of his incentive plan after the MOG-Beats deal closed in 2012.
According to the lawsuit, Hyman entered into a purchase agreement for MOG in June 2012. Hyman was brought aboard as CEO, and nearly the entire MOG team was brought aboard the company.
The suit claims that, under an incentive plan adopted during Hyman’s tenure, he would be entitled to compensation including 2.5 percent of the company’s “currently outstanding equity interests,” with 1 percent due on the first anniversary of Hyman’s date of employment, and subsequent installments due in subsequent months. The suit also claims that he was promised a grant of 25 percent of the company’s outstanding equity interests following adoption of the incentive plan if the company achieved a fair market value of $500 million or more.
Now, it is worth noting here that the news of an Apple-Beats deal broke about 7 days ago. By comparison, the lawsuit was first reported today, although we don’t have information about the date of the filing. If he were to be a part of Beats, we can assume that he would receive a huge amount of money as part of the deal.