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If You're Working For Stock, Read the Fine Print

Posted by timothy on from the see-subclause-in-above-subparagraph-g-to-wit dept.

cratermoon writes with a story of interest to anyone interested in working at a start-up, or compensated even partly in company stock: "Former Skype guy Yee Lee finds out that for people working at companies controlled by private equity firm Silver Lake, 'vested' doesn't mean what you think it means, and gets no money from the stock options he thought he could exercise. 'Skype spokesman Brian O'Shaughnessy said, "You've got to be in it to win it. The company chose to include that clause in the contract in order to retain the best and the brightest people to build great products. This individual chose to leave, therefore he doesn't get that benefit."' Fortune also has the story." Some of the commentary on the confusing language surrounding the stock grant says the company was doing nothing out of the ordinary, but it seems that's because opaque language is the norm.

7 of 374 comments (clear)

  1. Been there, done that by mark_reh · · Score: 5, Informative

    I worked for a startup, was given stock options, then the company went public. After about a month my options were worth about $1M on paper but I couldn't exercise them because that would have diluted the company founder's share value as they busily unloaded their shares. In the end I wrote a check for $24k to the IRS and ended up with nearly worthless options while the company founders cashed in and took their millions off to another startup to repeat the process.

    If you're working for stock options you're going to get screwed.

    1. Re:Been there, done that by CodeBuster · · Score: 5, Informative

      If you're working for stock options you're going to get screwed.

      YES! Let this be a warning to all techs and other employees who are offered shares in lieu of pay or other benefits. The lawyers and private equity guys will screw you over. Actually, its worse now than in the past because fewer deals ever go fully public due to the Sarbanes Oxley reporting regulations and bullcrap; who needs it? What VC would want to deal with all of that when the company can instead be sold to a private equity firm, a hedge fund perhaps, with most of the profit still intact? If nothing else, remember what they say in Hollywood: "a share of the net profits is a share of nothing." cash money on the barrelhead...accept no substitutes.

  2. Private options can be diluted on a whim by Anonymous Coward · · Score: 5, Informative

    I was in a startup, had a ton of stock options. CEO sold the company, but just before doing so... he granted himself a million options at a penny strike price. This diluted the shares so that anyone else made $0 because they were worth less than the strike price everyone else had. This was all after working there for years and putting in a lot of OT, and creating a product that gave the company real value it would not have had otherwise.

    True story. I opt for cash now, and will take options if they give them but do not consider them as part of my compensation no matter how much my bosses try to give them to me in lieu of increases.

  3. Winning at all costs? by DoofusOfDeath · · Score: 3, Informative

    , "You've got to be in it to win it.

    If that's his attitude, perhaps his former employees should kill him and steal his possessions. If "winning" is all that really matters, that is.

  4. Also covered in Wired by Anonymous Coward · · Score: 2, Informative

    I don't see any mention of the Wired article "Downgrading Skype and Silver Lake to ‘Evil’" in the comments, so here it is.

  5. Re:Working for stock options by symbolset · · Score: 3, Informative

    The article isn't about feeling sorry for him. It's about being aware that this has happened so that others potentially impacted by similar terms can evaluate their positions. Something like a sign on the beach that reads "Some swimmers recently eaten by sharks."

    --
    Help stamp out iliturcy.
  6. Re:...opaque language is the norm. by Anonymous Coward · · Score: 2, Informative

    Whenever I've been presented with a contract that I can't read there because it's too long I always say "I'm going to take this home and read through it before signing". I've never gotten an odd reaction from anyone when I've done that.

    If they require that I sign then and there then I'll decline what ever it is the contract is for. I don't care if it's the job of a life time. Forcing me to sign something that's been just handed to me is a tactic. If they're using tactics then they're trying to trick me into something. If they're trying to trick me then what ever it is they're offering is probable a lie.