Dallas data center company denied former employees $400 million in compensation, lawsuit says
Seven former employees of Dallas-based Prime Data Centers have filed multiple lawsuits, alleging they were denied over $400 million in promised phantom equity compensation. The employees claim executives misrepresented the value of their agreements as the company grew into a multi-billion dollar business. Lawsuits are pending in Dallas County, New York, and California.
Three former executives and four other ex-employees of Dallas-based Prime Data Centers have filed multiple lawsuits, collectively seeking over $400 million in compensation they allege was denied. The lawsuits, including one filed July 31 in Dallas County, accuse the company and its top leaders, CEO Nicholas Laag and CFO Ulrich Pelz, of a multi-year scheme to withhold "phantom equity" compensation as the company's valuation dramatically increased.
Phantom equity, a form of compensation tied to a company's value without actual ownership, was allegedly promised in employment agreements. Plaintiffs claim that as Prime Data Centers grew from a $140 million startup to a multibillion-dollar business valued at over $6 billion, executives stopped honoring these agreements. Rogge Dunn, attorney for the Texas plaintiffs, stated the lawsuits aim to secure compensation for employees instrumental in the company's growth who were allegedly denied their earnings.
The lawsuits further allege that Laag and Pelz misrepresented the value of phantom equity to employees, calling their agreements "worthless," while simultaneously leveraging their value to investors for recruitment and retention purposes and selling company equity for personal gain. The former employees claim they were encouraged to sign new agreements that significantly reduced their compensation's value by altering performance thresholds and calculation methods.
Prime Data Centers, Laag, and Pelz are accused of breach of contract, fraud, and other civil claims. Attorneys for the defendants have not responded to requests for comment. Similar lawsuits are also pending in federal court in New York and California state court.