Former Mindbody CEO loses appeal, multiplies his judgement

January 7, 2025

By KAREN VELIE

A court in 2023 ordered former Mindbody CEO Rick Stollmeyer of San Luis Obispo to pay $48 million to Mindbody’s shareholders after he concocted a scheme to benefit himself while harming the shareholders. He lost an appeal last month that will likely multiply his judgement.

In the 2023 ruling, a Delaware court ordered Stollmeyer and Vista Capital to pay approximately $48 million to the shareholders because of Stollmeyer’s breach of his fiduciary duties. The trial court also determined Vista aided and abetted Stollmeyer in his scheme.

Both Vista and Stollmeyer appealed the ruling.

The Delaware Supreme Court last month affirmed the trial court’s ruling “that Stollmeyer breached his fiduciary duty of loyalty by tilting the sale process in Vista’s favor for his own personal interests in ways inconsistent with maximizing stockholder value.” It also affirmed “that Stollmeyer breached his fiduciary duty of disclosure by allowing material omissions in Mindbody’s proxy materials.”

At the same time, Vista prevailed in its claim that it did not aid and abet Stollmeyer. Which means that instead of both Vista and Stollmeyer being jointly responsible for the judgement, Stollmeyer is now on the hook for the entire $48 million plus interest and costs.

While courting Vista, Stollmeyer tanked stock prices and shared inside information with Vista, according to the trial court.

On March 15, 2023, the trial court ruled in favor of former Mindbody shareholders awarding damages of $1 per share, plus interest, or about $48 million. The court based the judgement 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.”  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.

In his appeal, Stollmeyer also sought an offset for two previous settlements he made: one for $27 million and the other for $9.75 million. The Delaware Supreme Court rejected his request.

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