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(Reuters) - The California Public Employees' Retirement System said on Monday it had filed a lawsuit to block IAC/InterActiveCorp (IAC.O) from issuing a new class of non-voting stock that it said was aimed at securing Barry Diller's control over the online media company at the expense of other shareholders.
Chairman Diller controls more than 44 percent of IAC's voting shares, while the billionaire owns less than 8 percent of the company's stock, CalPERS said in a statement.
"As a result, no matter how much IAC uses stock to pay compensation or pursue new deals, Diller and his future heirs will never lose their voting control, even as their economic ownership of IAC can be reduced far below their current 8 percent level," CalPERS said.
Diller "implicitly threatened to block additional value-enhancing deals" unless IAC's board agreed to create a new class of non-voting Class C stock, rather than dilute his stake or pay other shareholders for the right to preserve control, CalPERS said, citing IAC's public disclosures.
"Granting dynastic control in response to implicit threats from a controlling shareholder is a breach of the board's fiduciary duty of loyalty," CalPERS said.
IAC did not immediately respond to a call or an e-mail seeking comment.
Other IAC investors have also filed lawsuits against the company, making similar accusations.
CalPERS, the nation's largest public pension fund, had a stake of about 0.2 percent in IAC as of Nov. 30, according to Thomson Reuters data.
Reporting by Abhijith Ganapavaram in Bengaluru; Editing by Savio D'Souza