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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

#231
post #157

I love that if a company implodes, the employees who took options over cash can't go back and say, "hey, I worked way harder and gave up way more than I should have, so I need to take some cash out of the founder's pocket," yet Pincus thinks it's perfectly OK to do the inverse... "Woa eh, you've made way more money than we thought, so we need to take some of your equity back." I hope Pincus, and anything he touches,…

It's like this guy can't help but be evil.

What are you talking about? It's the key to his success.

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

#232
Never work for unethical people. If they lack ethics in their dealings with customers, they will inevitably lack ethics in their dealings with employees.

Zynga's product does not provide a worthwhile service, nor does it improve people's lives. It creates no value. Rather, it (cleverly and cynically) capitalizes on weaknesses of the human psyche to relieve people of their money, one dollar at a time. This is an inherently unethical position for a company to be in. As such, regardless of the compensation offered, any prospective employee of the company should ask themselves whether the ethical foundation such a company displays in relation to its customers will extend to employees.

A CEO who is comfortable fleecing customers will feel similarly comfortable fleecing employees. I learned this lesson the hard way in the trades, working for people who would jack up prices and sell material and services that the customer did not need. They would shirk responsibility for deficiencies, and usually try to do jobs for cash so as to avoid paying taxes. Invariably, this lack of professional ethics extended to myself and my coworkers. Cheques would be short, overtime would not be paid, and promises would not be kept.

The best indicator that an employer will rip you off is their willingness to rip off customers. When you see it, start lining up interviews immediately.

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

#233

Earlier quoted context omitted.

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.

Yes, you and your sibling threads are all correct, but it's not extortion. It's immoral and will certainly hurt them in the future, but it's not extortion. I am simply trying to explain why this is a moral issue and not a legal issue. This is the equivalent of saying: 'your gonna have to take a pay cut or were gonna have to let you go'. It is morally repugnant and goes against everything we believe in the startup com…

Imagine your company gave you a $40,000 bonus. You get 4 checks for $10k each, dated 11-Nov-2012, 2013, 2014, and 2015. If the company is still in business on those dates you can cash the checks. If you leave or quit, you hand back the uncashed checks.

Now the company says "give us back 2014 and 2015 or you're fired". What would you say?

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

#234
post #55

Working for a startup (or hell, founding one) seems like an enterprise in which a person can get screwed 8 million different ways, and I only understand about four of them.

Your best defense against this is knowing and trusting the owners and co-founders. Ideally you'll have worked with them before, or some of your friends have. This is why I'm at the startup I'm at and not another.

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

#235

Regret has never been a good enough reason in the eyes of a judge to annul a contract. If Zynga agreed to the terms as described they haven't got a leg to stand on. The time to negotiate a contract is before it is signed, not retroactively. If they use the threat of termination then they will lose even more, not only will they not get their stock back, they will also have to pay excessive severance pay due to wrongfu…

IANAL, but I believe that wrongful termination suits are extremely difficult to win in most of the US unless an employee is fired because of discrimination, because the employee discovered an illegal act by his or her employer or a few other situations.

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

#236
post #62
post #54

Earlier quoted context omitted.

as an executive, do you think that zynga's executive team gave any thought to the bad press this might generate and the talent that this might scare away? From my perspective, this sort of thing scares me away from companies, because they might do it again in the future.

Honestly? I think this is the execs trying to grab as much stock as possible for themselves pre-IPO, so they can dump it and run. There's no way that this actually turns out to be a net positive for the Company. It's going to make it significantly harder to hire actual talent, it's going to cause morale decay and revolt from within the company, and it erodes Zynga's brand. Literally the only benefit here is that the…

Honestly? I think this is the execs trying to grab as much stock as possible for themselves pre-IPO, so they can dump it and run.

Seems likely. Zynga is an obvious build-to-flip. Now is the time to cash it in at peak. The original push in social gaming was based on scaling, but people are starting to demand quality and that's where Zynga is going to die.

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

#237

Isn't there a way to buy your stock pre-vesting? I'm pretty sure there is.

These aren't options. They're RSUs (restricted stock units).

An option has a strike price (typically breakeven with the stock price on the date it was issued, sometimes not). After it vests, you can keep it around for a while, and decide when it's best to exercise (possibly pre-IPO, possibly after). A restricted stock unit is essentially a share of stock that they give you free as soon as it vests.

RSUs have some advantages and disadvantages. One advantage is that short of bankruptcy, they never really go "underwater". One disadvantage: you deal with tax implications immediately.

It's difficult to take either those away once they've vested, but it's unvested RSUs I believe we're talking about here.

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

#238
post #156

Earlier quoted context omitted.

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-…

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.

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.

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

#239

Earlier quoted context omitted.

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.

Yes, you and your sibling threads are all correct, but it's not extortion. It's immoral and will certainly hurt them in the future, but it's not extortion. I am simply trying to explain why this is a moral issue and not a legal issue. This is the equivalent of saying: 'your gonna have to take a pay cut or were gonna have to let you go'. It is morally repugnant and goes against everything we believe in the startup com…

Morality and legality are somewhat intertwined in business law. Every contract contains an implied duty of "good faith and fair dealing." Violations of that duty can result in contract damages.

It's not at all clear-cut. See sections 5-6 of this article: http://www.bernabeipllc.com/pdfs/stockoptions.pdf

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

#240
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…

It's only a moral dilemma if you believe pocketing hundreds of millions of dollars is a moral imperative.

If not, you have exactly two choices. One is moral, one is not. The dilemma is between your greed and your morality, not between seemingly contradictory moral imperatives.

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