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Former Zoox employees sue, alleging rival offer was better than Amazon's

reuters.com

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Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#11

Post by harikb »

mobileexpert wrote: post #2

How would they possibly know the terms of either offer as former employees?

If they exercised their stock options before they left the company, they receive all details (including executive comp). But they wouldn’t know what the other offer was.

Btw this applies to those who are still employees too (if they explicitly bought vested options)

My advice to anyone joining a startup - if you have the negotiating power, insists that you must pre-exercise and purchase all options immediately when you start your job. You must put some money, but if you don’t believe in the company, why spent years there. Most companies don’t like this and their VC will object. This is why I said “if you feel you have the power to ask that”. If you can’t do that, exercise as soon as they vest

Edit: to clarify - this isn’t same as accelerated vesting. Vesting rules still apply - but you become a shareholder with appropriate rights.

Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#12

Post by WoahNoun »

MacsHeadroom wrote: post #8
gibolt wrote: post #5

Would it matter? When presented options, they aren't required to choose the best on a given metric. They can choose any, as long as the votes align. Perhaps the founders believed their product would go further (not die) under Amazon or that they stood to benefit more from stock rewards long term

The board has a fiduciary duty to act in the interest of shareholders. If the shareholders were not part of a vote, ie. the board voted, then the board is potentially liable for damages.

That is not true. It is a talking point that is repeated but has no bearing on reality.

Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#13

Post by traek »

WoahNoun wrote: post #12
MacsHeadroom wrote: post #8

Earlier quoted context omitted.

The board has a fiduciary duty to act in the interest of shareholders. If the shareholders were not part of a vote, ie. the board voted, then the board is potentially liable for damages.

That is not true. It is a talking point that is repeated but has no bearing on reality.

It is absolutely true that the board has a fiduciary duty to shareholders, and many states have statutes specifically protecting minority shareholder rights. Delaware is fairly unfavorable to minority shareholders though.

Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#14

Post by colordrops »

Isn't it pretty common for early employees to be screwed down the line during IPOs and acquisitions? That's been my experience and that of many colleagues, and has been a topic here on HN over the years, driving the idea that working for a startup is usually not in your interests except for particular cases.

Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#15

Post by fwiwm2c »

MacsHeadroom wrote: post #8
gibolt wrote: post #5

Would it matter? When presented options, they aren't required to choose the best on a given metric. They can choose any, as long as the votes align. Perhaps the founders believed their product would go further (not die) under Amazon or that they stood to benefit more from stock rewards long term

The board has a fiduciary duty to act in the interest of shareholders. If the shareholders were not part of a vote, ie. the board voted, then the board is potentially liable for damages.

So as per you the largest offer for common stockholders always wins? That is definitely not true since there are other considerations at play such as value creation post acquisition and/or strategic considerations.

Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#16

Post by alextheparrot »

traek wrote: post #13
WoahNoun wrote: post #12

Earlier quoted context omitted.

That is not true. It is a talking point that is repeated but has no bearing on reality.

It is absolutely true that the board has a fiduciary duty to shareholders, and many states have statutes specifically protecting minority shareholder rights. Delaware is fairly unfavorable to minority shareholders though.

If you’re hired by a Delaware Corp as a California resident holding shares in that company, wouldn’t the California rights be the ones the individual suing would have?

Otherwise one state would have a monopoly based on it being business friendl... oh wait, maybe that is the case.

Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#18

Post by URSpider94 »

MacsHeadroom wrote: post #7
mobileexpert wrote: post #2

How would they possibly know the terms of either offer as former employees?

As shareholders they may have a right to certain acquisition information, even if they aren't still employed. At the very least, current employees cannot be stopped from sharing such information with shareholders.

They can, actually. Almost all employees are required to sign an NDA as a prerequisite to employment. Disclosing company confidential information would at least be grounds for termination, at worst could expose the employee to a suit for damages.

Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#19

Post by AYBABTME »

bpodgursky wrote: post #3

> including employees who put in years at the company but left before May 2020. Zoox was founded in 2014. I mean, I don't want to get into the legal side, or even the ethical side, but on a practical note, former employees with stock should really expect to be at the very bottom of the pecking chain here. If you leave and hold stock, you're coming out in decent shape if you aren't completely screwed over. Like, Amazo…

The options one vested during their tenure was part of their compensation and encouraged them to work harder in a riskier environment than later employees, and arguably if later employees have continued to see their options gain in value, it's in large part for the work these earlier employees put in. Work that was compensated in salary and stock options.

The argument you're making is putting early employees against later ones, at the benefit of executives and investors. It's not a good argument, if you're hoping to make an empathetic and moral one.

Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#20

Post by [deleted] »

fwiwm2c wrote: post #15
MacsHeadroom wrote: post #8

Earlier quoted context omitted.

The board has a fiduciary duty to act in the interest of shareholders. If the shareholders were not part of a vote, ie. the board voted, then the board is potentially liable for damages.

So as per you the largest offer for common stockholders always wins? That is definitely not true since there are other considerations at play such as value creation post acquisition and/or strategic considerations.

[deleted]
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