Bill Le Clair v. KnowBe4, Inc.

── Bill Le Clair v. KnowBe4, Inc. ── Court: Court of Chancery of Delaware Date: May 27, 2026 Category: General IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE BILL LE CLAIR and JOSEPH ) POSPISIL, on behalf of themselves ) and all other similarly situated former ) stockholders of KNOWBE4, INC., ) ) Plaintiffs, ) ) v. ) C.A. No. 2024-1143-KSJM ) KNOWBE4, INC., SJOERD ) SJOUWERMAN, JEREMIAH DALY, ) STEPHEN SHANLEY, KEVIN ) KLAUSMEYER, SHRIKRISHNA ) VENKATARAMAN, GERHARD ) WATZINGER, KARA WILSON, KKR ) & CO. INC., KKR KNOWLEDGE ) INVESTORS L.P., ELEPHANT ) PARTNERS, ELEPHANT PARTNERS ) I, L.P., ELEPHANT PARTNERS II, ) L.P., ELEPHANT PARTNERS 2019 ) SPV-A, L.P., and ELEPHANT ) PARTNERS II-B, L.P., ) ) Defendants. ) MEMORANDUM OPINION Date Submitted: January 12, 2026 Date Decided: May 27, 2026 Ned Weinberger, Michael C. Wagner, Ryan C. Stieve, LABATON KELLER SUCHAROW LLP, Wilmington, DE; John Vielandi, LABATON KELLER SUCHAROW LLP, New York, NY; Jeremy Friedman, David Tejtel, Christopher M. Windover, FRIEDMAN OSTER & TEJTEL PLLC, Bedford Hills, NY; Douglas E. Julie, W. Scott Holleman, JULIE & HOLLEMAN LLP, New York, NY; D. Seamus Kaskela, Adrienne Bell, KASKELA LAW LLC, Newtown Square, PA; Counsel for Plaintiffs Bill Le Clair and Joseph Pospisil. Elena C. Norman, Skyler A. C. Speed, YOUNG CONAWAY STARGATT & TAYLOR, Wilmington, DE; Andrew J. Rossman, Courtney C. Whang, Charles H. Sangree, Julia I. Nusgart, QUINN EMANUEL URQUHART & SULLIVAN LLP, New York, NY; Counsel for Defendants KnowBe4, Inc. and Sjoerd Sjouwerman. Blake Rohrbacher, Benjamin O. Allen, RICHARDS, LAYTON & FINGER, P.A., Wilmington, DE; Brian M. Lutz, Jeff Lombard, GIBSON, DUNN & CRUTCHER LLP, San Francisco, CA; Colin B. Davis, GIBSON, DUNN & CRUTCHER LLP, Irvine, CA; Counsel for Defendants KKR & Co. Inc., KKR Knowledge Investors L.P., Stephen Shanley, and Kara Wilson. David E. Ross, Kevin A. Rudolph, ROSS ARONSTAM & MORITZ LLP, Wilmington, DE; Colleen Smith, Anastasia Pyrinis, LATHAM & WATKINS LLP, San Diego, CA; Stephen T. Nasko, LATHAM & WATKINS LLP, Washington, D.C.; Counsel for Defendants Jeremiah Daly, Elephant Partners, Elephant Partners I, L.P., Elephant Partners II, L.P., Elephant Partners 2019 SPV-A, L.P., and Elephant Partners II-B, L.P. T. Brad Davey, J. Matthew Belger, Eric J. Nascone, Nina N. Monzack, POTTER ANDERSON & CORROON LLP, Wilmington, DE; Counsel for Defendants Kevin Klausmeyer, Shrikrishna Venkataraman, and Gerhard Watzinger. McCORMICK, C.  A private equity firm agreed to acquire KnowBe4, Inc., conditioned on two institutional investors and the CEO rolling over their equity. The merger closed. After, the plaintiffs sued on behalf of a class of stockholders. They claim that the rollover stockholders and CEO formed a control group in connection with the merger and breached their fiduciary duties to the class. They also assert claims for breach of fiduciary duties against the KnowBe4 directors. The defendants moved to dismiss the complaint, and this decision grants their motions. As to the claims against the alleged control group, the plaintiffs failed to adequately allege that the rollover stockholders formed a control group with respect to the merger. As to the director defendants, this decision assumes that the entire fairness standard applies because a majority of the board rolled over shares or lacked independence from investors who did. But where entire fairness applies due to board conflicts, either a f