Ousted OpenWeb CEO Sues OpenWeb, Alleges Illegal Boardroom Coup

The founder and chief executive of the advertising technology company OpenWeb, Nadav Shoval, has won a temporary injunction against OpenWeb after the company abruptly ousted him on Sept. 9, according to public documents obtained by ADWEEK.

His surprising dismissal garnered significant intrigue, as Shoval founded OpenWeb in 2012, is the sole CEO of its U.S. subsidiary, and owns 7% of its shares, according to the court documents.

When OpenWeb emailed its employees on Sept. 11 saying that chairman Tim Harvey would replace Shoval, Shoval sent a company-wide email in response, saying he had no intention of stepping down.

“The board has falsely stated that I am stepping out of my role as CEO,” Shoval wrote. “Let me be clear: that is not true and not my intent.”

This latest legal development, issued Oct. 10, temporarily freezes any effort from OpenWeb to dismiss Shoval until a hearing can be held on Oct. 28. The litigation was filed in Israel, where OpenWeb was incorporated.

In the ruling, Judge Ariel Zimmerman told OpenWeb to “refrain from completing all the steps related to and projecting onto [Shoval], which were discussed in the meeting on Oct. 9, including the termination of the petitioner.”

The temporary injunction marks the latest twist in a stunning turn of events for OpenWeb, which was most recently valued in October 2022 at $1.5 billion after raising $170 million in Series F funding. The company’s technology moderates the comments section of websites and runs contextual advertising alongside them. OpenWeb’s investors include Samsung and The New York Times.

In the lawsuit, Shoval alleges that he was the target of a boardroom coup staged by several members of the eight-person OpenWeb board of directors.

In particular, it alleges that two board members—Jeff Horing from Insight Partners and Margaret Wu from Georgian Council—organized a meeting on Sept. 6 to dismiss Nadav from his role in order to seize control of the company.

Shoval alleges that this meeting was improperly convened, as neither he nor chief financial officer Haim Sasson were present. Therefore, its results are legally null, according to the lawsuit.

OpenWeb and Insight Partners declined to comment on the record. Georgian did not respond to a request for comment.

However, a report from the Israeli publication The Marker attributed the board member’s decision to dismiss Shoval to concerns with his “conduct on a professional and personal level—in the management of the company and due to the problematic behavior he exhibited on several occasions.”

Harvey also addressed the controversy in an internal memo to employees on Oct. 12, which was obtained by ADWEEK.

“Over the past few days, several articles have been written regarding ongoing disputes between OpenWeb’s Board of Directors and former CEO Nadav Shoval,” Harvey wrote. “It’s unfortunate that internal company matters are being aired publicly, and I’m deeply sorry for the noise and stress this may be adding to your already busy days.”

The fate of the company and the conclusion 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 experienced a leadership crisis.

Shoval’s ouster and subsequent lawsuit

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 shift that required Shoval to report to the chairman of the board, rather than the board.

Shoval objected to the change, which he said hindered his management capabilities, and he submitted an official objection on Sept. 5.

The board then used this note of objection as a pretext to oust him by interpreting it as a letter of resignation, Shoval alleges in the court documents. However, Shoval disputed that interpretation, pointing to language in the note that states, “For the avoidance of doubt, this notice is not 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 that appointed them—the venture capital firms Insight Ventures and Georgian—rather than honoring their obligations to OpenWeb.

“The decision to dismiss [Nadav] and the appointment of a temporary CEO are part of a scheme 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 legal action, Shoval requested to remove two of the board members he appointed—Omer Cygler, a managing partner at Lion Investment Partners, and Scott Galloway, the marketing professor and entrepreneur—and replace them with Ron Zuri and Mark Frons.

He also requested that any decision made after his controversial ousting be undone, effectively rewinding any action or decision undertaken by the executive team.

The injunction that Shoval won from Judge Zimmerman prevents the board from taking any further action until the Oct. 28 hearing.