Zynga to employees: Give back our stock or you'll be fired

Re:Zynga to employees: Give back our stock or you'll be fired by kls on Thursday November 10, 2011 @01:32PM (#3221176)

IT is not a valid reason to reclaim unvested stock, those are looked at like current compensation when termination is unjust. You cant terminate someone just to unvest them. That being said, I always draw a line through and contract that says that I loose vesting on termination, and change it to all options become instantly vested on termination. IF they want to negotiate as to when the options will be awarded to ensure that I am going to do a good job before I get options that is one thing, but I never allow for a termination to unvest me after the fact.

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Re:Zynga to employees: Give back our stock or you'll be fired by prostoalex on Thursday November 10, 2011 @01:39PM (#3221205)

contract that says that I loose vesting on termination, and change it to all options become instantly vested on termination

Curious which companies do that. Are you talking about 83(b) election, or were you really able to convince companies to instantly vest upon termination?

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Re:Zynga to employees: Give back our stock or you'll be fired by kls on Thursday November 10, 2011 @01:59PM (#3221301)

I rewrite the contract so that all options that have been granted but not vested, vest on termination. I was bite by this one and learned my lesson, I have also been bit by dilution, you pick these things up along the way. If they do not agree to vest on termination then we go back to salary negotiation or I walk. To me if they can terminate you and snatch back millions, it's just to big of a carrot to do so, as well that's all it is, is just a carrot if they can at any time deprive you of it.

So basicly I write it to secure what a good company wants, A pair of handcuffs chaining me to a position, but I ensure that once I have completed my time, they can't deprive me of that rightfully earned compensation, I do this by adding a clause that all awards vest on termination, nothing complex not a bunch of legalize just all options vest and the clause overrides any and all other verbiage related to the matter in any other section of the contract.

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Re:Zynga to employees: Give back our stock or you'll be fired by prostoalex on Thursday November 10, 2011 @02:13PM (#3221363)

Are you in executive/board/founder position?

Once again, curious to hear the name of the companies. I glanced at this http://www.linkedin.com/in/kentonsmeltzer from your HN profile, and didn't find any Silicon Valley names, but I'm assuming you might not disclose everything there.

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Re:Zynga to employees: Give back our stock or you'll be fired by kls on Thursday November 10, 2011 @02:33PM (#3221458)

I own my own freelancing company now doing JS web apps and mobile, I am based in the Orlando Florida area, but I am part of a Vally start-up as the CTO. Sorry I have to be vague on that topic right now. That being said, I was an executive at Marriott and was in line for the CTO position before I left, I did rewire the options contract with Marriott and went through several iterations with Legal. I also built 3 start-ups from the ground up, one exited to Hotels.com, another to TUI travel and the other to EAS nutrition. I would prefer not to say which I got screwed on but one of those exits I was left with nothing but a cold hard lesson in business, ownership and options.

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Re:Zynga to employees: Give back our stock or you'll be fired by prostoalex on Thursday November 10, 2011 @02:53PM (#3221559)

Got it. Yeah, someone with CTO title might bend the rules a little. Otherwise stock and option plans are generally approved by the board. Asking a company to redraw the contact essentially makes it a CEO's call to reconvene the board as it goes outside of standard grant plan - not something that they'd do for a staff employee.

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Re:Zynga to employees: Give back our stock or you'll be fired by kls on Thursday November 10, 2011 @05:23PM (#3222174)

I have done it on small contracts as well, granted we are talking about a sizable start-up in this thread, but never the less many first employees are in a position to renegotiate the options; most start-ups are much smaller at the time these contracts are written, even the company we are talking about in this thread was probably much smaller when most of these "big award to get them in the door" contracts where written. Many of those contracts may have been written when their where less than 20 people at the company. In those situations, contracts are very much negotiable. The second start-up I did I walked into a functional and profitable but small company, and I negotiated my options give the experience I had before. I was not at that time negotiating from the perspective of being the CTO but first technical employee.

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Re:Zynga to employees: Give back our stock or you'll be fired by blrgeek on Friday November 11, 2011 @11:18PM (#3227107)

Please please do a detailed post on this, either on HN or elsewhere. Engineers who join in early NEED to know this.

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Re:Zynga to employees: Give back our stock or you'll be fired by danssig on Friday November 11, 2011 @04:11AM (#3223972)

I do this on normal contracts. Just mark out the parts you don't agree with, add things you want in there, initial all your changes, sign and date it. Sometimes it will go through without anyone noticing (so make sure you have a photocopy).

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Re:Zynga to employees: Give back our stock or you'll be fired by feralchimp on Thursday November 10, 2011 @08:25PM (#3222897)

"If they do not agree to vest on termination then we go back to salary negotiation or I walk."

So true. Expensive lesson for these folks.

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Re:Zynga to employees: Give back our stock or you'll be fired by danssig on Friday November 11, 2011 @04:12AM (#3223978)

Sometimes I pine for the good ol' days where this kind of unethical behavior would be met with a good old fashioned ass kicking.

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Re:Zynga to employees: Give back our stock or you'll be fired by feralchimp on Friday November 11, 2011 @10:01AM (#3224767)

It's only the olden days until someone goes ahead and takes a swing.

I had the exact same thought about the "fraudster holding the Occupy Boston d/b/a certificate hostage" story. Especially in that kind of ground-up, loosely-couples collective action scenario, how does overt bad acting not result in a Code Red at the food tent?

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Re:Zynga to employees: Give back our stock or you'll be fired by Androsynth on Thursday November 10, 2011 @01:43PM (#3221225)

They're being terminated because they are not contributing relative to the amount they are being compensated. That seems to be perfectly legal to me (although it will probably hurt them in the long run).

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Re:Zynga to employees: Give back our stock or you'll be fired by rayiner on Thursday November 10, 2011 @02:30PM (#3221438)

Zynga used employee's jobs as a bargaining chip to get them to give up contractual rights, and that is something a legal case can likely be built on, even if Zynga would have been otherwise within their rights to terminate these employees.

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Re:Zynga to employees: Give back our stock or you'll be fired by kls on Thursday November 10, 2011 @05:56PM (#3222304)

Another point I wanted to make on this was that I also think the Google chef excuse is just that an excuse, I think they will target the big awarded first employees whose value was in getting them off the ground and which they should rightfully be paid for. Their value was then, when the company did not have to money to fairly pay their market price, and they had to use promises of future reward to get them to sign on. By all definitions the developers that got them off the ground are now being overcompensated to their market value, but that was the deal right, we can't afford you because you are a good programer and can get 250k in the market, we want to underpay you now with the promise that if we make it you get to participate in the windfall. So it does not matter if they are not contributing now, it was the contribution while they where being underpaid relative to the market that made them entitled to the windfall. It doe not matter if they where a chef or a developer if they agreed to take reduced compensation as a risk, with the promise of participating in the reward and are being deprived of that then they are in a very grey area.

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Re:Zynga to employees: Give back our stock or you'll be fired by kls on Thursday November 10, 2011 @02:08PM (#3221341)

Right, I am fine with the part that hey we think you are overpaid and we want to renegotiate the option awards that have not been granted, but they are walking a fine line renegotiation the ones that have already been awarded but have not vested. Many companies will award a certain amount of options and those options come with a vesting schedule so for example I get awarded 4 shares that vest in one year. My contract would say that I get 4 awards of 4 shared over 4 years and those awards vest in 1 year. They are going to run into trouble if they try to claw back the awarded shared because technically I have put in the work for those shares. Now if the contract says all stocks will be awarded in 4 years then yes technically they have not earned them yet, but I would have walked from that contract the moment I saw it.

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Re:Zynga to employees: Give back our stock or you'll be fired by Androsynth on Thursday November 10, 2011 @02:23PM (#3221407)

Most contracts state that you lose unvested shares upon termination. It doesn't make sense any other way.

However the problem with your math (and most others in this thread) is this: lets say Zynga values me at 4 shares, and I get 1 vested per year. However after two years, and a few splits, I have 128 shares.

The company hired me to work as a 4 share employee, then it grew like crazy and I became a 128 share employee. This is normal in tech nowadays, most people take it for granted that you just get lucky and accept your windfall. But the fact is that you are a 4 share employee being paid 3000% of what you were hired at.

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Re:Zynga to employees: Give back our stock or you'll be fired by danssig on Friday November 11, 2011 @04:22AM (#3223999)

> However after two years, and a few splits, I have 128 shares.

You're not a "4 shares employee" you're a "% of the company employee". The 4 shares are worth some percentage of the company and after all those splits they're still worth that same percentage. Splits usually happen to get the cost of the overalls hares down but a $1m holding in some stock is still worth $1m after the split.

>But the fact is that you are a 4 share employee being paid 3000% of what you were hired at.

So what! This is the point of accepting stock as compensation. They worked below what they were worth for the hope that they would win the lottery. They did win the lottery and now the company wants a redo.

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Re:Zynga to employees: Give back our stock or you'll be fired by kls on Thursday November 10, 2011 @02:40PM (#3221498)

What you are talking about is no dilutional where if they split, you are not diluted and your options do not get diluted, so instead of the 4 you agreed to you get the equivalent after the split. Most contracts are dilutional, where you get 4 regardless of splits, I have never seen a contract (in my dealings) that has been non-dilutional in original form, I have always had to add non-dilutional clauses to my contracts because I have had my ownership eroded through this very mechanism.

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Re:Zynga to employees: Give back our stock or you'll be fired by tlrobinson on Thursday November 10, 2011 @05:50PM (#3222265)

The employee took a risk accepting equity as part of their compensation, especially at a pre-IPO company.

Zynga shouldn't be able to come back, with 20/20 hindsight, and say "turns out we did better than we thought we would so we're taking your stock back".

If they failed they certainly wouldn't be giving employees other compensation to make up for their stock being worthless.

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Re:Zynga to employees: Give back our stock or you'll be fired by chernevik on Thursday November 10, 2011 @09:11PM (#3223042)

Well, yes. But the possibility of this excess was part of equity compensation in the first place, and came with the possibility (probability!) of compensation less than their contribution.

IANAL, but if the termination is motivated by the success of the equity gamble the employee took up front, that looks more like breach of contract. Don't want to keep them? That's fine, but pay what you promised you'd pay.

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