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Lawsuit exposes former Mindbody CEO’s tainted deal

April 3, 2023

Rick Stollmeyer

By KAREN VELIE

A Delaware court ordered former Mindbody CEO Rick Stollmeyer and Vista Capital in March to pay approximately $48 million because of Stollmeyer’s breach of his fiduciary duties to Mindbody shareholders during the sale of the then-publicly owned company.

While courting Vista, the company that bought and now runs Mindbody, Stollmeyer tanked stock prices and shared inside information with Vista, according to a 120-page decision. The court found that Stollmeyer breached his duties to shareholders when he “greased the wheels” for Vista.

Chancellor Kathaleen St. Jude McCormick ruled in favor of former Mindbody shareholders on March 15, awarding damages of $1 per share, plus interest, or about $48 million. The judgement was based on evidence of what Vista would have paid without Stollmeyer’s interference.

In 2018, Stollmeyer “had grown frustrated with his inability to monetize his holdings of Mindbody stock, fearful of the volatility and fickleness of the public markets, and uncertain about his ability to lead Mindbody through its next stage of its growth,” according to McCormick’s opinion. In order to solve his problems, Stollmeyer decided it was time to sell.

Before Mindbody’s board began to search for a merger partner, Stollmeyer had already selected Vista, though he did not tell the board. Stollmeyer also failed to inform the board that he had attended a summit where he learned of the great wealth Vista delivered to former CEOs of companies they obtained.

Vista aided and abetted Stollmeyer’s breach of fiduciary duties when they signed off on his inadequate disclosures, according to McCormick’s opinion.

“Stollmeyer suffered a disabling conflict because he had an interest in near-term liquidity, a desire to sell fast, and an expectation that he would receive post-merger employment accompanied by significant equity-based incentives as a Vista CXO,” according to McCormick’s opinion. “Stollmeyer tilted the sale process by strategically driving down Mindbody’s stock price and providing Vista with informational and timing advantages during the due-diligence and go-shop periods.”


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Who wants their kid born in a building named after a swindler. Cal Poly took down the name of the man who donated the stadium scoreboard after he was caught swindling. Same thing, take it down Dignity Health.


13

I followed MindBody for years and purchased the stock a few weeks after it went public. When the company was sold I was sad but happy.


It’s weird seeing so many people dump on a guy who built a company out of his garage in the state that he grew up in and absolutely loves and became I believe the largest employer in SLO.


Rick still lives SLO in a little house that he remodel. Matter of fact he might very well be your next door neighbor. If the person writing this article actually took the time to review the required SEC Form 4 filings they would have determined that Rick was not desperate for money and was not paying his 1st wife anything and was still very much married to his 2nd wife.


From what I can tell Rick found a great company to buy his baby that he built from scratch and stock owners like me did very well when it sold.


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Rick found a great company to buy his baby


If you think Vista is a great company, you haven’t been paying attention. They are corporate robber barons who gut companies, then pump and dump them to make a quick buck. They sacked many good employees at Mindbody in the name of corporate greed, making it no longer the largest SLO employer, while driving quality to rock bottom. They would have already sold off Mindbody if Covid hadn’t ruined their plans. If you want to see the sort of ethics Vista’s CEO has and how it matches with Rick’s ethics, just google “vista robert smith tax fraud”


So yes, we should dump all over Rick because he blatantly lied to his board and manipulated the stock price to sell to Vista, so Rick could make a quick buck, instead of being the ethical honest CEO that employees and shareholders expected him to be. If Vista thought Rick was so great, then why did they force him out as CEO and then force him off the board? Nope, Rick got used and duped by Vista and the thousands of employees who lost their jobs thanks to his greed owe him their scorn, not their thanks.


8

Let’s have a little compassion for poor little Rick here. He needed to ram through the sale of Mindbody at fire-sale prices to cover all those normal expenses of daily life, we all have, like: Buying your third $140,000+ Tesla, bankrolling your family member’s businesses, paying all that alimony and childcare to your two ex-wives, dropping a cool mil to get your name on a birthing wing, making those pesky lawsuits disappear, etc, etc


31

Two ex-wives? Does this mean stupid can get wealthy?


5

This was never a viable company. A monstrous building in the highest cost of living market south of SF. The free food trucks and dick-around basket ball court fun came to a real quick end when this goofball sold his stake. Sorry kids! Take-your-dog-to-work companies only work in the era of 0% interest and VC capital looking for yield.. Have fun selling cell phones.


39

The nerve of young people in highly technical roles, earning a livable wage, and… bringing their dogs to work. What’s this world coming to? Ok boomer, settle down.


-4

LOL! Highly technical… Easily replaced w/ AI. Remember “learn to code?” Learn to weld. Last 15 years have been an artificial macro-economic environment with zero gravity. Mindbody couldn’t even float within that environment. The real reckoning hasn’t even hit yet. Check out the tech layoff happening nation wide. Pets.com era all over again.


-1

Big Red, thanks for telling us you know nothing about software engineering. Various companies have been promising “low-code” and “no-code” software solutions for decades, but it’s all snake oil and never pans out. You can’t learn to be a professional software engineer by taking a half a year of coding camps and watching youtube videos. Sure AI, can assist, but at the end of the day you will always need qualified professionally trained software engineers. Do you think the software industry is somehow immune to the laws of supply and demand? If “coding” was so easy and replaceable with AI, they wouldn’t be paying trained software engineers $300-400k and instead they would have simple people like you do it with AI for minimum wage.


-2

It was a good run. Hope you saved some bucks. My job is harder because I lead and develop people which is why I’ll continue to make more than those numbers you seem to think are impressive. God’s speed in the new economy


-1

Ha, never worked there, never wanted to. Mindbody is definitely not a top-tier well-run engineering firm and much of that is thanks to the poor leadership of Stollmeyer who never understood the engineering involved or trusted his engineering staff. However your comparison of coding to welding and saying it is “easily replaced with AI” is a joke. Despite recent layoffs, software engineers are still in high demand and command some of the highest starting salaries of any career.


3

Clearly you’re an authority on AI and code, BigRed. Tell me, which languages are you proficient in?


Interesting that choose to spread your ignorance and bullshit on a website created by… welders? No, that can’t be right…


1

From what I’ve heard from employees, this was and still is typical executive behavior at Mindbody. After the board sacked “Slick Rick” Stollmeyer, they brought on Josh McCarter, who was the CEO of Booker, a mediocre salon booking company that was saved from imminent bankruptcy when they were acquired by Mindbody in 2018. Three years later, Mindbody acquired Classpass, another lackluster tech firm that was hemorrhaging money like it was going out of style, and proceeded to install their former CEO, Fritz Lanman, at the helm when McCarter unsurprisingly couldn’t hack it. Apparently, Mindbody is the second chance high school for failing CEOs, so its a mystery why anyone would expect a good outcome here. Anyone who has ever worked at a Vista-owned company knows the only thing that matters is cutting costs and running as lean as possible, so Vista can sell you for 3-4x and make a quick exit along with most of the execs. Classic pump and dump scheme.


40

Another cohort of Adam Hill. Birds of a feather….you know the rest!


51

The company, it’s worth noting, had been losing money in recent years: Cash flow rose from negative $8 million in 2013 to negative $18 million in 2014. Still, it was continuing to grow revenue, bringing in $101 million in 2015, up from $70 million in 2014. https://www.inc.com/zoe-henry/mindbody-ceo-rick-stollmeyer-reflects-back-one-year-after-ipo.html


12

Soooooo you’re pretty much reinforcing “Por2gee’s” comments and “birds of a feather” statement. Stollmeyer supported Adam Hill, Adam Hill supported Stollmeyer, and both were equally just thinly veiled frauds out for their own personal gain. The only difference I see is Stollmeyer was wise enough to offload his fraud before it crashed, unlike Hill who just kept perpetuating his greed and power lust until the day he tried cleaning his ears with a pistol.


1

One more reminder of the importance of CalCoastNews to local reporting. Thank you, Karen.


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