Zynga to employees: Give back our stock or you'll be fired • Hacker News Board

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

#181

Post by roc » Thu, Nov 10, 2011, 8:13 PM UTC

ChuckMcM wrote: post #136

kls wrote: post #79

Earlier 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…

> "Some talent might be more attracted to Zynga because they 'deal with the dead wood' in a proactive way."

Would you really classify this as "dealing with the dead wood?" If they were "dealing with the dead wood", I'd expect they would just fire them for being dead wood in the first place and get their unvested options back as a side-effect.

Trying to keep the dead wood employed, but scaring them into effectively renegotiating their contracts isn't the sort of "dealing with" that very many people are going to look upon favorably.

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

#182

Post by ootachi » Thu, Nov 10, 2011, 8:15 PM UTC

Androsynth wrote: post #165

wavephorm wrote: post #160

Earlier quoted context omitted.

They aren't being fired for being overpaid, they're being threatened with termination unless they surrender their equity in a privately owned company. Definiton of extortion (from wikipedia): Extortion (also called shakedown, outwresting, and exaction) is a criminal offence which occurs when a person unlawfully obtains either money, property or services from a person(s), entity, or institution, through coercion. What…

That is an inaccurate view of the situation. Unvested shares are not equity. You are acting as if they are being asked to give away something that they own; they are being asked to give up future compensation. I put this in another comment: "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…

The company didn't hire you to work as a 4-share employee, they hired you to work as a 4-share employee with significant upside potential. That is how early startup employees are compensated for the increased risk and lesser salary they take on.

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

#183

Post by api » Thu, Nov 10, 2011, 8:15 PM UTC

johngalt wrote: post #122

Zynga is aiming squarely at their feet and firing a cannon. Would you invest in a company where management is obviously looking for a short term cashout at the expense of the future success of the company? The future success is precisely what the investor is buying . It's like buying a car while the seller is actively pulling parts out of it . The results of this will be reduced share values combined with lawsuits ea…

They don't care about the long term. They are going for IPO (hand off to dumber money) and then getting out.

The game is: lie, leverage, flip.

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

#184

Post by enjo » Thu, Nov 10, 2011, 8:16 PM UTC

ajg1977 wrote: post #105

thezilch wrote: post #59

Earlier quoted context omitted.

IANAL. Considering the employees are going to be challenging California's "at will" employment laws and the fact that the charges against the employees is performance based, how likely is #2 to have a fighting chance?

Just because California is an "at will" state doesn't mean a company cannot be sued for wrongful termination or constructive dismissal.

Zynga would be effectively firing them for being too expensive. That's probably the most common reason for any layoffs. It sucks, but I can't imagine they have a legal leg to stand on.

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

#185

Post by api » Thu, Nov 10, 2011, 8:20 PM UTC

muzz wrote: post #142

How 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…

Because they made inflated stock awards to lure in the suckers, then canned it at the last minute. It's classic.

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

#186

Post by jsavimbi » Thu, Nov 10, 2011, 8:22 PM UTC

Androsynth wrote: post #103

lemming wrote: post #80

Earlier quoted context omitted.

This is utter bullshit. And if it's not, anyone reading HN has better options. Let's stop with the all-employers-are-out-to-screw-you rhetoric because it's clearly not true.

Most companies will never be in this position though. What if you were an executive and you suddenly found yourself in a position to pocket hundreds of millions of dollars simply by firing a few employees. At the very least, that's a moral dilemma. It would be very easy to go from 'upstanding and moral' to going flat out existential in that situation. It's a scummy thing to do, but the human brain can justify a lot o…

You can always hire a relative/mistress to a no-show/do-nothing job and further dilute the option pool in your favor. It's easier on the conscience as you effectively cancel the stealing out by adding to the employment rolls.

Beware the shuffling of chairs, granting of titles, lateral promotions, unannounced appearance of new employees cutting back on company snacks. These are all clues that lead to a financial event where unless you're in the driver's seat, you're bound to take a hit.

For those of you with the altruistic bent, please watch the Spanish Prisoner. It's a classic example of fuckery.

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

#187

Post by ootachi » Thu, Nov 10, 2011, 8:23 PM UTC

ajg1977 wrote: post #105

thezilch wrote: post #59

Earlier quoted context omitted.

IANAL. Considering the employees are going to be challenging California's "at will" employment laws and the fact that the charges against the employees is performance based, how likely is #2 to have a fighting chance?

Just because California is an "at will" state doesn't mean a company cannot be sued for wrongful termination or constructive dismissal.

Constructive dismissal is legal in California.

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

#188

Post by nobody3141592 » Thu, Nov 10, 2011, 8:28 PM UTC

Androsynth wrote: post #149

wavephorm wrote: post #125

Earlier quoted context omitted.

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.

In a startup stock options are a future promise to make up for lower salary. You are gambling on the company doing well.

What they are doing is like hiring a salesman on low salary + commission and then firing them the day before the commission is paid.

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

#189

Post by nathanb » Thu, Nov 10, 2011, 8:28 PM UTC

Androsynth wrote: post #165

wavephorm wrote: post #160

Earlier quoted context omitted.

They aren't being fired for being overpaid, they're being threatened with termination unless they surrender their equity in a privately owned company. Definiton of extortion (from wikipedia): Extortion (also called shakedown, outwresting, and exaction) is a criminal offence which occurs when a person unlawfully obtains either money, property or services from a person(s), entity, or institution, through coercion. What…

That is an inaccurate view of the situation. Unvested shares are not equity. You are acting as if they are being asked to give away something that they own; they are being asked to give up future compensation. I put this in another comment: "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…

And you are making the critical assumption that the employee or the employer in your hypothetical situation expected those four shares to remain four shares.

If I'm a small company just getting started, what do I have to attract top talent? Maybe I can't afford to pay as well as the established companies, or maybe my benefits are going to be worse (or nonexistent). But I do have stock options. If I'm a fledgling corporation, stock options can get me more talent than I could otherwise command, and if I'm a skilled engineer, I feel like I can directly affect the fortunes of this company and thus my own net worth if I am compensated heavily in stock options which, in the unlikely chance that all goes better than expected, could make me wildly rich.

Your hypothetical four-share employee certainly didn't sign on just on the strength of those four shares alone. And, quite possibly, the employer played up the possibility of those four shares becoming many more shares down the road if things go well.

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

#190

Post by nobody3141592 » Thu, Nov 10, 2011, 8:32 PM UTC

nobody3141592 wrote: post #52

skmurphy wrote: post #35

Earlier quoted context omitted.

CA law provides for at will employment but if the original option was not contingent on specific performance beyond what is needed to continue as an employee, and they are willing for the employee to continue working there provided they surrender their stock they may be in more of a gray area. It's in the nature of a targeted pay cut but it doesn't seem to involve a demotion or change in position, they are effectivel…

Doesn't matter if it's unvested stock. They simply fire you without cause the day before your stock vests. All they are saying is - give back the stock and we won't fire you the day before it vests.

Although legally they might be safer firing everyone and re-hiring them post IPO. Although I would hate to work with anyone that they got to agree with this!