This the more polite "I work at Zynga" option?

More seriously... probably more along the lines of company fails, maybe left before vested, etc. Curious to see a list of ways though... or peoples experiences.

If options are "underwater" at the time of acquisition, it can be part of the deal that acquiring company does not need to honor those, and they are basically deleted. That happened to me, when options at a public company were acquired by another public company. All the vested but underwater options were simply deleted. When share price rose at the acquiring company my options would have been worth $600,000+. Oh well... ;(

How can the deletion be legal? Isn't the purchasing company required to honor all debts of the purchasee?

debt != equity. see also bankruptcy discharge.

Lots of companies have claw-back clauses where they buy the options back from you if you leave before they've vested. Or, in my case, the company was sold and the common stock (I bought the shares not options) was worthless.