One Year Ago: iVillage Sued by Former Executives

Originally published on January 17, 2000 and brought to you today as a time capsule.

Two former executives of iVillage, Inc. filed separate lawsuits against the popular Web site Friday, alleging that the company lured them from established companies with promises of lucrative compensation packages that never materialized.

“This is a case in which a company and its chief executive employed a calculated pattern of fraudulent representation and promises in recruiting top executives,” said both complaints, which were filed by the same New York attorney.

The lawsuits, filed in U.S. District Court in Manhattan, allege that iVillage CEO Candice Carpenter recruited Steven Carter, a former executive at NBC Cable Networks, and Joanne Hindman, a former financial officer at Newsweek magazine, by offering significant stock options along with their base salaries.

Ask and Be Fired

After becoming iVillage’s executive vice president of sales in July 1997, Carter alleges that he was demoted and fired in October 1998 because he refused to follow “questionable business practices.”

Hindman’s filing also claims that after being hired as chief financial officer in September 1997, she discovered that iVillage was improperly recognizing revenue prematurely. Moreover, the lawsuit states that she became increasingly uncomfortable with the company’s “marginal and inappropriate” accounting practices.

According to the complaint, Hindman voiced her concerns and was promptly terminated after just four months on the job.

A spokesperson for iVillage declined comment until the lawsuits could be reviewed.

Promises, Promises

Both Hindman and Carter claim that they never received any of the 280,000 stock options that were promised them. In addition, both contend that they were fraudulently coaxed into leaving secure positions by iVillage.

According to Hindman’s filing, Carpenter “assured” her “that the job would greatly advance her career, particularly by getting IPO experience.” Instead, Hindman says that her career path was altered and that the termination forced her to take a position as a chief financial officer of a small Virginia company at a much lower salary.

Carter’s lawsuit alleges that an iVillage executive defamed him in published comments, which said he “just didn’t get his hands around the Internet.”

iVillage Numbers

iVillage’s more than 2.7 million registered members can access services such as e-mail, message boards, and chat rooms through more than 15 channels that focus upon topics such as health, food, parenting, relationships, and shopping.

The site, which targets women ages 25 to 54, generates more than 80 percent of its revenue from advertising, but is beefing up its e-commerce presence with offerings such as its online baby products retailer. America Online and NBC own about 10 percent and nearly eight percent of iVillage, respectively.

According to the lawsuit, Carpenter owns about 770,000 shares of iVillage. Its stock closed on Friday unchanged at 17 5/8.

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