So I'm curious why they didn't follow the standard Valley way of dealing with this - issue enough new shares and grant them to everyone but the people on the "hit list."
Probably an anti-dilution clause prevents that.
Zynga to employees: Give back our stock or you'll be fired
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Re: Zynga to employees: Give back our stock or you'll be fired
#142How did several employees have equity of more than 1% of the company??
Even in a heavily equity-based compensation package in an early stage startup, anything over 1% is usually reserved for VP-level if not C-level executives, as the entire employee pool is usually only 20-25%
Per WSJ: '"Some of these people were sitting on over $200 million and close to 1% of the company" when fully vested, said one person familiar with the list that was compiled.'
http://online.wsj.com/article_email/SB1000142405297020462190...
Re: Zynga to employees: Give back our stock or you'll be fired
#143Pathetic. Very disappointed to see this. This is the cancer that sets the stage for other startups as well.
How is one supposed to decide which startup to work for and at what stage in the startup to join? I liked the 37Signals principles when and IF they ever go IPO/cash out. I think the VC community needs to push for such a clean and transparent model (Wishful thinking).
Re: Zynga to employees: Give back our stock or you'll be fired
#144Earlier quoted context omitted.
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).
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…
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.
Re: Zynga to employees: Give back our stock or you'll be fired
#145Wouldn't there be other ways to pull this scam off? Perhaps less outwardly visible ways?
Assuming the board is on board with the plan, why not do some sort of stock dilution and re-issue preferred shares or something like that? Conventional wisdom would dictate that the last thing you want going in to an IPO or M and A is some goofy accounting on the books but the last few years make me think Goldman and company are really really good at deciphering that and more than accepting of the practices.
With all the things I've heard about game companies in general and then Zynga itself, it's a wonder that the game industry keeps moving forward. There is always fresh meat though.
To the Zynga folks... I don't know that you'll be able to lawyer up and fix it, I just don't think the laws will be on your side and there are too many loopholes. However, possibly building a coalition and contacting Communication Workers of America or something similar might make a larger impact, assuming you can build a coalition... Distasteful as I think it is, I think it might be your best option.
Re: Zynga to employees: Give back our stock or you'll be fired
#146Earlier quoted context omitted.
I think this is spot on. I have friends who left the finance industry because they absolutely hated the toxic personalities that it attracts. The ones who went into tech say it isn't much different. Anywhere there is fast money to be made will attract scumbags.
The most disturbing thing that I noticed was this: a person's status in the business world (or at least certain sectors of it) seems to be perfectly correlated with how they'd probably score on this: http://en.wikipedia.org/wiki/Hare_Psychopathy_Checklist I'm not making some superficial political statement either. I noticed it in myself. There were people I worked with that I completely hated yet... when they were pr…
A psychopath as defined by Hare will never kill for you. At least, not in the sense you mean by "kill", which is probably "go to extreme lengths". They quite likely would kill for you, under the right circumstance - but only if it served their purpose and only because taking a life doesn't carry any particular emotional connotation for them. The scariest thing about realizing you're surrounded by psychopaths is knowing that they have about as much regard for your feelings and well-being as those of their toaster oven.
From an evolutionary psychology viewpoint, things are probably the other way around. That is - psychopathic personalities evolved to reflect, albeit in a very shallow way, the traits we're programmed to identify and follow as leaders.
I find the whole topic morbidly fascinating. In a way, it's the closest we can get to observing an alien intellect. The idea that so many executives in and around my industry could be such people just creeps me the hell out.
Re: Zynga to employees: Give back our stock or you'll be fired
#147Earlier quoted context omitted.
They have a strong argument that the options deprived them of real salary that they would have earned elsewhere. It will be interesting though. The reality though is they just lost every bit of talent they ever gained. The good talent is already in talks with other organizations I can guarantee you, I personally would be looking for an exit and no one I mean no one worth their salt is going to sign up with them now.
" ... and no one I mean no one worth their salt is going to sign up with them now." I think this is probably a bit extreme (I realize you may be employing hyperbole for effect but still) Zynga is a considered a "hot" IPO candidate and as such you will find folks who recognize that not everyone is a super star. Some talent might be more attracted to Zynga because they 'deal with the dead wood' in a proactive way. And…
I think this is probably a bit extreme (I realize you may be employing hyperbole for effect but still)
Yes some but I don't think much, IT employment is very much based on trends, in the 70-80's the hot place to work was Bell Labs or DEC, in the 90-00's it was Google. If you ruin your name you loose the A-Listers interest and everyone in tech fashions themselves A-Listers. So when this happens you have to rely on finding talent that has not proven itself yet or settling for the "it's just a job crowd". The biggest draw to pre-IPO is stock and the possibility of fortunes. To me and probably quite a few others, this is a shot across the bow that they will limit the participation in the fortunes part, which kills the primary reason people join pre-IPO start-ups. I would not underestimate the gravity of this action especially in this hot of a market.
Re: Zynga to employees: Give back our stock or you'll be fired
#148Company stock is basically ownership, and there's a dollar value attached to it. So is does Zynga's request run into the practice of extortion? It's another way of saying, give us your money or else something bad will happen.
Not quite, since it's unvested shares they're taking back. The company has promised to give those shares to the employees when they hit certain tenure milestones, but the company still owns them in the meantime. If they fire the employee, the company keeps those shares.
This is extortion of sorts right? I mean, yes they could fire the employee for genuine reasons, but if there is a way to prove that the conversation did occur, where the execs did tell the employee to return the unvested stocks in order to keep the job, its pure blackmailing.
I wish there was someway to expose these crooks and bring them to justice.
Re: Zynga to employees: Give back our stock or you'll be fired
#149Earlier quoted context omitted.
Do they have a legal footing to stand on? The way I read it is: 'We consider you overpaid for the job you are doing and we no longer wish to keep you around at that compensation level'. That is a valid reason to fire someone in CA isn't it?
The employees that get their shares stolen can sue for extortion, which is exactly how I and most people would describe this situation. Unfortunately the law generally favors those with more money and resources.
Bullshit, this is a free market economy. If I feel you are overpaid for what you contribute, I can fire you. This is not extortion, they are readjusting their compensation to the market-going rates.
Whether it is moral or whether it will hurt them in the future are different questions.
Re: Zynga to employees: Give back our stock or you'll be fired
#150Earlier quoted context omitted.
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 ens…
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).
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.