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Zynga To Employees: Surrender Pre-IPO Shares Or You're Fired
ardmhacha writes "Zynga seem to think they were overly generous handing out stock to early employees. Fearing a 'Google Chef' situation they are leaning on some employees to hand back their unvested stock or face termination. From the article: 'Zynga's demand for the return of shares could expose the company to employment litigation—and, were the practice to catch on and spread, would erode a central pillar of Silicon Valley culture, in which start-ups with limited cash and a risk of failure dangle the possibility of stock riches in order to lure talent.'"
Is the mafia running this company or something?
.... be fired and get rich (and maybe an employer that respects me), than to be forced to sell the valuable stocks that I personally contributed success to.
In truth, those with pre-IPO stocks are the foundation of the success for the company; what we are seeing is absolute disrespect to those who are responsible for the success.
Fearing a Google Chef situation?
What... a competent professional working at the company over a long period of time demonstrating a high level of skill, overseeing, directing and training many others, and earning the respect of his colleagues?
Is this kind of thing bad now?
Coming from a company with stellar ethics like Zynga, what do you expect?
Unfortunately, these slimeballs are smart enough to figure out ways to screw their employees, their customers, and in fact anyone with a dollar in their pocket.
Too bad for the honest hard working startups that are prepared to do the hard yards and get their just rewards. This will definitely have ripples of distrust that permeate deeply.
Science advances one funeral at a time- Max Planck
I can't imagine how an action like this can be legal in terms of anyone wanting to take it to court - surely the employee would win hands down, but I can't also see how it would be beneficial in the long run. Srely if you took your employer to court like this (and assuming you won) and went back to work - surely the culture there after that must be very antagonistic. Wouldn't the employer then be looking for any excuse and going through all the hoops to have that person leave the company anyhow.
The only way I can imagine to pursue this would be to take them to court, win (I assume quite easily) and then start looking for another job as the workplace has become hostile - which sort of leads to where they are going in the first place... "Give it back or you are fired" OR "Ha, I won, now I need to find other work...". It just seems to be a half dozen here and six there.
Moved to http://soylentnews.org/. You are invited to join us too!
Why not simply water down the stocks like they did with Facebook's Chief "Financial" Officer?
Were they really upset about that guy? Sounded like he did top-notch work from the Wikipedia references.
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The better lesson is probably not to go to work for people who are well known douche-bags. Seriously, if you couldn't see this kind of thing coming when you went to work for Zynga, you really weren't paying attention.
"Who is the Journal of Quantum Physics going to believe?" --Stephen Hawking
Next thing you know, their employees would be asked to pay back portions of their salaries that management thought are undeserved.
They're going to make some of their employees very disgruntled. Their company depends on keeping a bunch of servers running. Am I the only one who sees the potential reliability problem here?
-- Support a free market in the field of government
Given that it is Zynga the employer may hire you based on that fact that you did sue them.
Fight Spammers!
From TFA, the small minority of employees asked to return the stocks are executives, not engineers, architects or the creative folk.... Most executives don't deserve what they get paid in USA. Most of them just lunch off of the productivity and manipulate for their personal gain. There's a term for that in the nature. It is called a parasite.
He is doing the right thing. So let's not be quick in judging him. ok ?
Totally true, they have a very strange history, from their funding coming from the Russian mafia, to the events of today.
The place itself is supposedly a real grid to work in, so it is likely all these employees deserve their options. However, management always holds the power in situations like this, and more importantly, the investors that control management. If they are indeed controlled by the Russian mafia, isn't it better that these programmers give up their stock options rather than lose fingers?
Microsoft, for example, just made the granted options worthless for many years.
Help stamp out iliturcy.
Agreed, f*ck Zynga. Boycott, anyone?
what do they do again?
It pays to be obvious, especially if you have a reputation for being subtle.
FarmVille, etc. I already boycott based on lack of interest in the product.
Most of those aware of Zynga's demands for the return of stock said the effort was designed to replenish the pool of shares that could be awarded to attract new talent.
IMHO, Zynga has a lesson to learn. I highly doubt unvested shares are going to attract very much talent in the future for their company. Or at least among prospects who do the slightest bit of research and have a modicum of common sense.
I am starting to think that Corporate America is completely lawless! I read the referencing article which used the phrase "givers remorse" I would say that as an employee if I forwent any cash salary in exchange for shares or options then it was a payment and not a gift. I would think just the threat of "surrender your hard earned options and shares or get fired" would have to be illegal, I wouldn't think they would even have to fire anyone just threaten. Surely there is a government body in the US that can and should step in here?
"Son, in life or business, always remember, you dance with the person you brought".
This is a basic point of honor - you keep to the commitments you made.
More expensive than you thought it would be? Tough, honor it.
Harder than you thought? Tough, honor it.
See something else that's better? Tough, honor it.
Yes, I know, business isn't about honor, it's about profit. I simply feel there is no profit in being dishonorable, no matter how much money you can make. No Sir, "Greed is good" in not in my orison. You know the good companies in your life. Go look at their mission statement. Top one is "To serve our customers/community". You also know who the bad companies are. Look at their mission statements. The honest ones list "Increase shareholder value" as first. The dishonest ones say "To serve our customers/community". In the end, it isn't about what someone says, it's what they do. Actions don't lie. Words can.
That is why I will listen closely to what someone says, but I pay more attention to what they do.
In a perfect world, someone would whisper this in Sony's, RIAA's, MPAA's, ASCAP, AT&T's, and many others ears:
"Honor is a lasting value.
Try it.
For a change."
Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.
I'm kind of rooting for them to start striking. The rich. With knives.
"Who is the Journal of Quantum Physics going to believe?" --Stephen Hawking
It's EXECUTIVES who awarded each other obscene levels of options. These options would DILUTE the shares that deserving rank-and-file employees should have. The CEO is playing hardball and threatening to toss the execs who pulled this.
"...the firm's executives reportedly justified their strategy by saying it was best for the company. With the unvested shares, the executives believed they could attract more top talent with the promise of stock."
Do they really think they will be able to attract top talent with the promise of holding on to some stock for awhile, but having it taken back before they can actually sell it? I seriously doubt any future employees will want even one UNvested share of stock.
Most of the articles/commenters have used very imprecise language about the nature of what Zynga is asking their employees to give up.
When you join a tech startup you are granted the option to buy some number of shares of the company's stock at a certain price (which, when you join very early, is incredibly low compared to what it will be when the company is sold/goes public). To prevent people from taking the job for a day, buying all their shares, and leaving, the options become available ("vest") on a schedule such that you are able to buy some additional percentage of your shares every additional month you work there. Additionally, in most agreements, your options stop vesting (obviously) but also evaporate within a few months after you leave a company (so you can buy the vested shares or just get nothing).
Note that they're still just options until you actually exercise them (buy them for the low option price).
It sounds like the Zynga employees are being asked to forfeit unvested shares - not only have the employees not yet paid to own these shares, they haven't even worked at the company long enough for those shares to be available for purchase (that's what an unvested share is). This is not like Zynga taking money or any other assets from their employees - they're just modifying an agreement that's part of their compensation. It's most closely equivalent to having been promised an incredibly large bonus in the future and then them telling you that you'll be fired if you don't agree to accept a lesser bonus.
It's strange that they're threatening people with their jobs here considering that there are probably much less dramatic ways to accomplish this same thing. For one thing, most stock option agreements are granted at the board's pleasure - if the board wants to cut you off at any time, they can. In that sense, there's nothing illegal (I am not a lawyer) about reducing the number of shares in someone's option agreement.
Don't get me wrong - this is a dick move that's congruent with Zynga's less-than-stellar history of ethics. As someone who works for a tech startup, I'm scared that something similar would happen to me/lucky that I work for good natured people.
If you quit, you can't collect unemployment. If you refuse, then they have to decide to fire you ... and either way, you've still go the shares.
Also, this could be interpreted as constructive dismissal, in which case you can tear up that non-compete you signed, since they have broken the terms first.
As a Sili Valley engineer, here is what I want to know: Who are the VC's and board members behind Zynga that told the CEO that this was a good idea? I want to avoid any company that those clowns are involved with. This is not how Silicon Valley works. Stock options are part of the compensation. At two companies I worked at, the stock options turned out to be worthless. That happens a lot. When the options turn out to be worth something, you darn well better let me keep them. If you don't do that, there is no way in hell that I will ever work at any company that any of those VC's or other financiers are involved with, fuck you very much. That is the Silicon Valley social contract. The clowns that did this need to be outed and ostracized.
They're cutting the deadwood. It will get ugly, but that's where the execs earn their lavish compensation. Anyone worth their stock will not be touched. This is the most depressed economy since the 1920s. I expect tactics like this to be the norm for at least a decade. What are 25 million unemployed going to do, strike?
Look at history. When this happens bloody revolution is the norm. I hate violence. So I'd hope you're wrong.
These posts express my own personal views, not those of my employer
Zinga will still attract talent, but the contracts will have thicker prose about termination and vesting conditions, so it will be much harder to pull this stunt a second time. But perhaps at this stage of growth they are beyond that.
I watched Politics, Strategy, and Game Theory last night, which talks about Grim Trigger and the conditions under which, in iterated prisoner's dilemma, you care more about the future than defecting in the present moment.
It's a competent lecture with no great pizzazz.
Here's a fairly nice piece by an undergraduate I stumbled upon brushing up on Grim Trigger: Debunking the Prisoner(slashcode fuckup)s Dilemma on Robert Axelrod(slashcode fuckup)s Emergence of Cooperation among Egoists and why cooperation is a lot more common than the shallow analysis would have you believe.
I really wonder what payoff matrix he constructed to author that blog under no fixed identity. I found a Tweet referencing the site by the apparent author with one or two clues about his circumstance.
The punishment for Zynga in future iterations are employment contracts with a lot less room to wiggle if they screw up future hires. The reward in the present iteration is yanking back a substantial chunk of the entire company.
If the quiet vestors really aren't showing up and pulling their weight, it doesn't seem great to let them get away with that either. I don't think Zynga's presumption is that they can't fight this, but more like "the effort involved will be a shock to their lazy asses" so they are likely to settle without going ten rounds.
Too bad for the honest hard working startups that are prepared to do the hard yards and get their just rewards.
Hmmph, at least somebody in the tech industry is working to prevent future bubbles by discouraging rampant startups and the idiots who invest money in them.
Zynga are the heroes of the ninety-nine percent.
I'm not making this up! They seriously said this:
Although Zynga's decision might be met with some criticism, the firm's executives reportedly justified their strategy by saying it was best for the company. With the unvested shares, the executives believed they could attract more top talent with the promise of stock.
Who in their right mind would trust their upper management to actually deliver?
"Hey! We lured in our initial staff with some stock options, but then we strongarmed it back from them once it looked like it might be worth something. They took the gamble and we got the payoff. Now we would like to offer it to you! No, really, honest - we wouldn't do that to you! Just the people we initially hired. Hey...wait...where are you going?"
Weaselmancer
rediculous.
In British English, the proper conjugation is to treat companies and other organizations as plural. A google search for the submitter, ardmhacha, gives results which are all related to Ireland. Thus he was writing correctly.
I once got a job offer several years ago that included stock options, because the salary was below market. The catch was the offer merely said "stock options" and gave no terms whatsoever. WTF! That's like saying they would give me a salary compensation without saying how much. I explained to the recruiter that was trying to hire me that I had to interpret the options part of the offer as "1 share per year, vested in 10 years". He said it would be a lot more than that. I asked him how much more. But he only said that they were still working out the details with the lawyers. So I declined the offer. They later went out of business, so I guess they must have had trouble doing a lot of things right.
If you get an offer with stock options, you need to know exactly what the terms are. And technically, you should understand the risks, including the risk of the company going under. And to do that properly you need to look at the business plan and financials. You almost certainly won't get to see the latter unless the offer is for CFO or CEO. If you're sure the company will succeed, then you at least need to know the terms to know how much you could get out of it, and the risks they will cheat you.
now we need to go OSS in diesel cars
Up until 2006 or so, I used to get mod points regularly, every week.
Then suddenly I stopped getting mod points. That was about 5 YEARS ago.
*Nothing* for 5 YEARS.
Then, suddenly, yesterday, I got some again.
What the hell kind of algorithm can lead to a 5 YEAR hiatus in mod point allocation?
Won't work because you'll never get the females to agree and that is their bread and butter. I have literally had females come in and have their machine built around how well it would run that Zynga crap. Farmville, Mafia Wars, Frontierville, they eat that crap up. It used to drive me nuts when my now ex GF would stay the weekend with me that at 7:AM on the dot she'd play her hour of Farmville. That was as much a part of her morning routine as my morning caffeine and she wasn't happy unless she got it so I kept a spare desktop in the corner just for her so I wouldn't hear the clicking when I was trying to sleep.
As for TFA "Scummy company treats employees like shit and tries to fuck them over" news at 11 and here is Cathy with the weather "Water is wet Bill, back to you".
ACs don't waste your time replying, your posts are never seen by me.
do I get to keep my stock options?
Because, honestly, that seems like the better option here. Not to mention the money I will recoup when I sue you for wrongful termination.
I had a friend who went to work for IBM in sales, he was tearing it up, making big bucks. They upped his quota retroactively, he had to pay back part of his commissions. Can't have the new kid making more than his boss.
Never let a lack of data get in the way of a good rant.
According to the article they want to take the stock options back so they can use them to attract new employees.
Surely the act of taking them back greatly reduces the attractiveness of any future options Zynga issues?
This should comfort potential IPO investors that this company is well run and managed. Plus a round of employee firing, and employee lawsuits ought to really assure them.