Zynga To Employees: Surrender Pre-IPO Shares Or You're Fired 554
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.'"
Illegal? But surely still lose lose? (Score:5, Interesting)
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.
Re:I would rather.... (Score:4, Interesting)
I am no lawyer but this sounds like a break in promissary estople. Basically, if someone gives you advice and you make a decision based on that advice and it causes financial harm on yourself you can sue to recover the losses.
They were promised IPO shares and to top it off they acted on it by buying them and taking employment. Now they get to lose them after they took their advice and financial harm because I doubt they would buy them back + they could have worked for someone else who *would* give them pre-IPO.
To top if off you are fired that is a financial loss too, but you were fired because you took a promise of IPOs which you were denied.
A lawyer would be drooling on this. CEOs are assholes and are known to do these things and sleep well at night and not care. The CEO could devalue everyone elses share to $0, but keep his high of course using accounting tricks. That is legal and a better thing to do if you want to be evil and steal. I hate to break it but no company has morals and only look at you as mathmatical functions that bring in money. Your sole existence is to make someone richer in corporation and they only care about money. I hate laywers but here this is good as it would force employers to fullfil their bargins they made when the CEO was a little guy and needed help.
Re:I would rather.... (Score:5, Interesting)
No. AFAIK if they don't give ownership of the shares back, they get to see their company ownership grow, even if they are fired.
That's not how that works. Contracts with unvested stocks always involve, "you must work with the company until such and such date" clauses. They get fired, they lose the stocks.
So yeah, sue the bastards.
Re:I would rather.... (Score:5, Interesting)
In TFA, they stated that employees were told if they were fired they would lose all stocks.
I think we'd have to see how that played out in court. But I think if I promise you something as part of a job contract and then threaten to fire you instead of meeting that contract, then you'd have a fine advantage when it comes to suing my pants off.
Also, I wonder if they expected this to become public? Somehow I doubt it.
Re:Pincus (Score:5, Interesting)
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?
Re:I would rather.... (Score:5, Interesting)
Re:Mafia (Score:5, Interesting)
This particular tactic is definitely new, but the entire culture of sociopathic behavior is nothing new to large American corporations. This one has simply found a new way to be total assholes.
Given that they're in California, which is a very employee-friendly state (one of the few I believe where non-competes are unenforceable), hopefully they'll lose their shirts after some newly-fired employees sue their sorry asses.
Re:Mafia (Score:5, Interesting)
Yes. Their management is well known for doing all kinds of borderline illegal stuff. Seriously, look up stories about how they got started.
Not just borderline. I don't know about this mafia control stuff, but I remember their direct pixel for pixel use or art assets from...was it Age of Empires?
Re:Not following the Google Chef reference (Score:5, Interesting)
I think it is class prejudice in the modern world. I don't think there is a problem with the chef in Google, but other executives look at a working class man who risked his career with a start-up and received a very large reward and think that should not be right. To them, working people should stay in their class where they belong and not become multi-millionaires regardless of the risk and hard work they took or did.
It sounds to me like those people who give lottery tickets as a gift and then sue the recipient for a share when the tickets turned out to be big winners - because they say they did not mean to give so much to the recipient.
Truly bizarre and illogical in my view.
Re:Pincus (Score:4, Interesting)
Agreed, f*ck Zynga. Boycott, anyone?
Re:Mafia (Score:5, Interesting)
There's a related study about how succesful managers in modern corporations are closer to pyschopaths than average.
http://www.medkb.com/Uwe/Forum.aspx/alternative/43595/Question-Authority [medkb.com]
Re:Mafia (Score:2, Interesting)
This, for sure. I have personally had it happen to me. Dilution of shares is definitely the most popular way to get fucked over.
Another one is where they sell or otherwise break up and restructure the company right before your options vest, making them worthless. Had that happen to me too.
Trust no one.
Re:Mafia (Score:5, Interesting)
Perhaps this would make a good ask /. submission. How do you avoid getting screwed over the old fashioned way. And this way as well. I'm sure there will be plenty of IANAL, and consult your attorney answers but there have to be some who have successfully negotiated this maze...... And the more you know when going to an attorney the better off you are in either a) judging their competence and/or b) saving a bit of cash by doing some upfront research so you're asking questions that are relevant.
Dont' quit, but don't agree either. (Score:5, Interesting)
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.
Re:Not following the Google Chef reference (Score:4, Interesting)
in an ideal world you'd be compensated equal to your merit and not your hire date.
That's how it worked out in practice if you account for the risk factor. Those people who came to work at Google early on were working for a startup, with all the risks that entailed. It's a risky proposition, considering how many startups fail for each one that succeeds (and the employees of those startups then have to look for a new job, which they may not be able to easily find - and even if they do, may well incur additional relocation expenses etc). But anyone can gamble that way, there's no significant barrier of entry here. So I don't see why I should envy someone who took that gamble when I did not - we had equal chances in that regard, I chose to play safe for a guaranteed small reward, he chose to play risky for a non-guaranteed large reward. Fair's fair.
Re:Mafia (Score:3, Interesting)
I've never heard of founders having anti-dilution rights, and even if they did it would be very unlikely they'd be able to exercise them (unless they have their own massive cash war-chest). When investors have them, they don't get free shares, but rather the option to buy enough additional shares at the new valuation to keep their ownership percentage the same. Companies may issue more options after raising a round but there are usually strings attached - and when that round is an IPO, there's quite a bit of scrutiny (see: Groupon)
That said, it's very typical that only founders and VERY early employees end up with any significant amount of money, and only then if they're not dealing with ownership that's shady as fuck. I have little sympathy for anyone that gets screwed by Zynga since they're actually quite transparent about not operating on the up-and-up (Pincus is quite obviously a psycho, and just look at their "products" if that's not enough) so it's not too hard to see this kind of thing coming. But any talented developers who want to reclaim what's left of their soul... get in touch with me.
Re:Dont' quit, but don't agree either. (Score:5, Interesting)
Unvested shares aren't actually money in your wallet if you quit the company or get fired. They're only worth something after they vest, and the agreement at companies such as these is that they don't vest if you've left the company before the vest date (whether you've been fired or quit).
Re:Mafia (Score:5, Interesting)
Sadly, it happens. Usually it's in the form of reducing retirement benefits after employees have already put the time in.
I worked at a company that would fire employees who got close to the point at which they were "vested" in their retirement plan. At one point they had to scramble around and fire a poor guy who had been there almost ten years; they discovered he had enough vacation time to put him over the vesting period (which then was ten years).
That was when I - and several others - started looking for new jobs.
Re:Illegal? But surely still lose lose? (Score:4, Interesting)
Re:Dont' quit, but don't agree either. (Score:5, Interesting)
I'm willing to bet that almost any jurisdiction in the United States would find someone getting fired to prevent the vesting of shares would be an act of fraud on the part of the employer.
The contract is: work for us, don't quit or get fired for cause, and if we are a success you'll have shares and maybe get rich. Their 'cause' is 'we might have to pay up'. FRAUD!
The smarter employees should be starting a class action lawsuit right now, and burn that company to the ground and pillage the corpse for whatever they can get.
Re:Dont' quit, but don't agree either. (Score:5, Interesting)
>either way, you've still go the shares.
You only get to keep vested shares.
These are unvested shares at issue. If you quit, or are fired, you lose them. If you are fired because you would not give back the shares, you might have a case to get them back, or a settlement of some sort.
Yep, courts tend to take a pretty dim view of the "we agreed you get X if you are working for us, please give up X or we will fire you" gambit: it's almost bad faith by definition.
Happened to me once: I just printed the memo and put in on my cube wall; got a few lawyers/mangers dropping by to "explain why I needed to sign." I sweetly said no: they said "ok" and got out of the room fast: they were smart enough to figure that concocting a paper trail to fire a well-rated employee, given a memo like that, was somewhere between "bad" and a felony.
Re:Mafia (Score:2, Interesting)
That wasn't Zynga, that was Civony (the name of which also caused them some problems, so now they go by another name I don't care to advertise).
Re:Mafia (Score:5, Interesting)
There used to be a common misperception that the age of expansion of the American West was lawless with murdering, theft, and rape a daily occurance. People were actually quite civilized, often more so than today. You were very likely to be shot dead for acting like an a*hole, especially to a lady. A vigilante hanging of people that wouldn't conform to the norms of society was often performed during a Sunday picnic, so the children would have an up close and personal experience of what would happen if they made poor choices in life.
In my past life, I quite often found that when my drug-dealing friends said that they would do something, it happened. Even if they got shot to make it happen. I got screwed over so many times by the preacher's kids, and other scumbags like them, it wasn't funny. It almost got to where a suit and tie meant someone was out to rob me/lie to me/screw me over. "Real" people backed up their word with their life.
I think the biggest lesson I've learned in life is that when people are held accountable for their actions with the valid threat and rapid application of violence, they act the most "civilized". It's almost like dealing with small children, sometimes the closest way to get a lesson to their brain is through their butt. It seems like every "civilization" that removes or reduces the threat of violent consequence to members for their actions, doesn't last long. They go down in flames of revolution, political corruption, and general anarchy. They look much like we do today.
Re:Pincus (Score:5, Interesting)
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?
Comment removed (Score:4, Interesting)
Oh, it happens (Score:5, Interesting)
Re:Mafia (Score:4, Interesting)
Eh, Barring employees from talking about wages is a violation of The national labor relations act. I'd cry tears of joy if I had it on paper someone was firing me for that reason, because winning the resulting lawsuit would be basically guaranteed.
TRUE! But, do be aware that the NLRB has ruled that companies can restrict/prohibit said discussions in work areas and during work time. But in the bathroom, lunchroom, or any other "non-work" area (not sure if it also has to be during non-work hours in said places), you're good to go.
Re:Mafia (Score:4, Interesting)
Ha! Yeah! A union would fix that right up!
Back in the real world, my mom was a union employee of a railroad. At the high point of her career, she had the job title of Wire Chief and was basically in charge of their communications system (which included a phone switch in her office - not a PBX, but a 5ESS). When she'd worked there approximately forever, they closed her office and gave her a choice of moving to Minnesota or the local railyards. She hates winter and decided to stay. Well, her new role was sucky and only got suckier as she grew closer to retirement. She had a lot of seniority with the company but almost no seniority at the railyards, the yard employees resented an office worker occupying one of "their" jobs, and management gave her boss orders to make her quit before she retired.
At first, her main job duty was to stand next to the tracks and write down the numbers off the sides of train cars as they rolled past. By the end, they had her mopping the outhouses the train crews used. She made a game of the the situation:
Boss: So, how's the outhouse cleaning going for you? (with a nasty smile)
Mom: Oh, I love it! I hated being stuck in that old office and now I get to spend time outside!
Boss: [seethe]
But back to the original point: her union didn't do jack to help her. Nothing. Nada. She was a paying member for nearly three decades and the "proper" union provided her no assistance whatsoever.
And that's why I have nothing but disgust for American-style unions. Maybe they're legitimate and useful where you live, but as far as I can tell the ones we have are utterly useless.