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Zynga To Employees: Surrender Pre-IPO Shares Or You're Fired 554

Posted by samzenpus
from the no-trade-backs dept.
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.'"
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Zynga To Employees: Surrender Pre-IPO Shares Or You're Fired

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  • Mafia (Score:5, Funny)

    by jimi1x (1105911) on Thursday November 10, 2011 @08:54PM (#38018432) Homepage
    Is the mafia running this company or something?
    • Re:Mafia (Score:5, Insightful)

      by Grishnakh (216268) on Thursday November 10, 2011 @08:57PM (#38018448)

      I don't see how this is all that different from the way most large American corporations operate these days.

      • Re:Mafia (Score:5, Insightful)

        by vijayiyer (728590) on Thursday November 10, 2011 @09:11PM (#38018568)

        I think demanding already paid compensation to be returned is very different from the way most American corporations operate. I've never heard of it before. It's mind boggling, and if I were said employee, I'd definitely quit on the spot.

        • Re:Mafia (Score:5, Informative)

          by Surt (22457) on Thursday November 10, 2011 @09:15PM (#38018594) Homepage Journal

          Quitting is a bad move. Getting fired is much, much better for your lawsuit.

        • Re:Mafia (Score:5, Insightful)

          by Culture20 (968837) on Thursday November 10, 2011 @09:17PM (#38018614)
          I wouldn't. I'd tell my lawyer to prepare his largest vault and stand my ground. There are times when suing is the right course of action.
          • Re:Mafia (Score:5, Insightful)

            by Oxford_Comma_Lover (1679530) on Thursday November 10, 2011 @10:25PM (#38019048)

            I wouldn't. I'd tell my lawyer to prepare his largest vault and stand my ground. There are times when suing is the right course of action.

            There are times when *threatening to sue* is the proper course of action. There are fewer cases where filing a complaint (i.e. initializing a lawsuit) is a proper course of action. It is much, much rarer for suing and going to trial to be the proper course of action.

            Lawsuits take years, cost major time and money--usually even if you win, though then it is a net gain--and the outcome is not assured. Settlement is usually (though not always) the rational choice, unless the other side is being irrational or is poorly advised.

            • Re:Mafia (Score:5, Insightful)

              by mysidia (191772) * on Thursday November 10, 2011 @10:47PM (#38019170)

              There are times when *threatening to sue* is the proper course of action. There are fewer cases where filing a complaint (i.e. initializing a lawsuit) is a proper course of action. It is much, much rarer for suing and going to trial to be the proper course of action.

              Probably don't "threaten to sue" in such a situation; get your lawyer to write some warning letters, first of all.

              People casually threaten to sue all the time and aren't serious about it -- make sure they know you've done your homework and are serious about pursuing what course you need to best defend yourself from unjust treatment.

            • Re:Mafia (Score:5, Insightful)

              by Mr. Freeman (933986) on Thursday November 10, 2011 @11:28PM (#38019416)
              Threatening to sue has all the weight of someone threatening to beat you up over the internet. People scream "I'M GOING TO SUE" for every single fucking thing nowadays. The proper action would be to retain legal council and make them aware of the situation immediately. They might write a warning letter, but this is much different than you, without representation, telling your company that you're going to sue them.
        • Re:Mafia (Score:5, Interesting)

          by Grishnakh (216268) on Thursday November 10, 2011 @09:19PM (#38018638)

          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, Insightful)

            by wpiman (739077) on Thursday November 10, 2011 @09:35PM (#38018726)
            Typically they just issue new shares and dilute current shares; while giving management and investors a number to keep their percentages the same. This is a far more insidious way to screw over the little guy that the old way.
            • Re:Mafia (Score:5, Insightful)

              by JoeMerchant (803320) on Thursday November 10, 2011 @09:47PM (#38018816) Homepage

              Mod Parent up +5 Sad Truth.

              just issue new shares and dilute current shares; while giving management and investors a number to keep their percentages the same.

              Similarly, mark Zynga clueless for trying something so boneheaded when the parent's tried and true method accomplishes the same thing, but in a way that has been, sadly, accepted by the establishment for years.

        • Re:Mafia (Score:5, Informative)

          by sjames (1099) on Thursday November 10, 2011 @09:28PM (#38018696) Homepage

          Sadly, it happens. Usually it's in the form of reducing retirement benefits after employees have already put the time in.

          • Re:Mafia (Score:5, Interesting)

            by SwedishChef (69313) <craig.networkessentials@net> on Thursday November 10, 2011 @11:27PM (#38019406) Homepage Journal

            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:Mafia (Score:5, Insightful)

              by MechaStreisand (585905) on Friday November 11, 2011 @02:05AM (#38020218)
              Management at companies like that need to do hard time. 20 years in prison would be nice. That's the only thing that will stop this.
            • Re:Mafia (Score:5, Insightful)

              by SwedishPenguin (1035756) on Friday November 11, 2011 @08:42AM (#38021862)

              Every time an article like this is posted on Slashdot, I keep wondering why the hell people don't organize.. It seems to me that American IT-workers are in sore need of a proper union. Behaviour like that would lead to a world of hurt for the company over here, yet Americans just lie down and take it like some kind of slaves.

              • Re:Mafia (Score:4, Interesting)

                by Just Some Guy (3352) <kirk+slashdot@strauser.com> on Friday November 11, 2011 @02:12PM (#38026650) Homepage Journal

                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.

        • Re:Mafia (Score:5, Informative)

          by shutdown -p now (807394) on Thursday November 10, 2011 @10:38PM (#38019106) Journal

          The problem is that this is about yet-unvested stock - so if an employee quits, or is terminated for cause, he'll never get to vest them and loses them all. So company, basically, demands that employee surrenders a part of his unvested stock in exchange for being given an opportunity to vest the remainder.

          That said, I've never heard of that ever happening, large corporations or no. Certainly not from anyone I know at Microsoft or Google. You can kinda understand why, too - it's morally equivalent to promising a certain payment upfront, and then reneging on it. The effect of doing so, especially in a way as public as this, will severely affect company's ability to attract talent. I mean, I know that I would never, ever consider working for Zynga after this news, and I bet many people would agree on that. I don't know what the hell they were thinking with this. Unless, of course, they plan on switching to 100% H1-B for rank and file (and even then the ones that are actually good would still skip on such an offer).

        • Oh, it happens (Score:5, Interesting)

          by Radical Moderate (563286) on Friday November 11, 2011 @02:38AM (#38020366)
          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.
      • Re: (Score:3, Insightful)

        by Chris Burke (6130)

        Then you're blind.

        And if you interpret this as a defense or implicit approval of the behavior of most large American corporations, then you're deaf.

        Distinguishing: A lost art of great value.

      • Microsoft, for example, just made the granted options worthless for many years.
    • Re:Mafia (Score:5, Informative)

      by Surt (22457) on Thursday November 10, 2011 @09:00PM (#38018474) Homepage Journal

      Yes. Their management is well known for doing all kinds of borderline illegal stuff. Seriously, look up stories about how they got started.

      • Re:Mafia (Score:5, Interesting)

        by Colonel Korn (1258968) on Thursday November 10, 2011 @09:21PM (#38018646)

        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:Mafia (Score:5, Insightful)

      by sjames (1099) on Thursday November 10, 2011 @09:26PM (#38018680) Homepage

      Clearly not. The Mafia might be a criminal enterprise, but they have always understood that without your word, you're nothing.

      • I would actually be fascinated to see some research(probably not practical to carry out, unfortunately) as to which mode of business produces a greater proportion of destructive and sociopathic leadership...

        Does a criminal environment, with its, er, vigorous, competition and possibility of advancement through killing people? Or does the rule of law, where smirking and saying "We did nothing illegal" won't get you shot by the people you've just stiffed?
        • Re:Mafia (Score:5, Interesting)

          by wdavies (163941) on Thursday November 10, 2011 @09:57PM (#38018906) Homepage

          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:5, Interesting)

          by hot soldering iron (800102) on Friday November 11, 2011 @12:49AM (#38019874)

          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.

  • I would rather.... (Score:5, Insightful)

    by joocemann (1273720) on Thursday November 10, 2011 @08:56PM (#38018438)

    .... 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.

    • by Swanktastic (109747) on Thursday November 10, 2011 @09:00PM (#38018482)

      From a legal perspective, it seems stupid to approach people and ask them to to surrender their shares. Firing them straight up if they are truly "MIA" as Pincus claims would be justifiable. There's nothing wrong with letting go an employee who doesn't meet expectations. Asking them to surrender their shares, THEN firing them makes your motivations clear.

      This simply confirms that Zynga is a company with no morals.

      • by Billly Gates (198444) on Thursday November 10, 2011 @09:11PM (#38018564) Journal

        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.

        • by nomadic (141991)
          What they probably did is figured they'd demand this, get sued, and once the lawsuit got rolling settle for a lesser amount, and walk away with a net profit even considering legal fees even if they didn't get as much back as they initially demanded. What I'm curious about is the vesting requirement; do the employees vest if they're fired?
          • by jeremymiles (725644) on Thursday November 10, 2011 @09:19PM (#38018636) Homepage Journal
            I believe they don't vest if they're fired. So your choice as offered is (a) be fired and lose your stocks, or (b) lose your stocks.
            • by Firehed (942385) on Thursday November 10, 2011 @11:09PM (#38019300) Homepage

              Disclaimer: IANAL. You lose unvested shares if you're fired or if you quit. You can still buy vested shares at the original strike price for up to, I believe, thirty days after termination.

              Whether you'd want to after getting screwed so royally is another matter, but chances are there's still money to be made (recovered may be a better term) if you keep emotion out of it and dump them just after the IPO, especially if you got in early enough and have the options at a favorable strike price. In fact you might not need to wait until they go public; there are plenty of secondary markets for privately-held stocks. The company probably has the right of first refusal in that case, but you still get paid the same amount; they just get to buy the shares back at the agreed-upon price instead of you doing business with the original buyer. This is in effect what Zynga's trying to do, but without actually paying to get the stock back.

        • Your premise is basically correct, but the use of the word "advice" was somewhat improper. It's if someone promises you something - for example, if you call a charity and promise to give them $10,000, and they then hire a contractor to build them a new food shelf building, and you then refuse to give them the money, they can sue you under p.e. to force you to follow through with your promise.

          Just giving someone advice ("hey, you should think about building a castle in this swamp!") does not mean that someon

        • by Anonymous Coward on Thursday November 10, 2011 @10:52PM (#38019198)

          As an owner of a corporation and one who cares about his employees, I can tell you that you paint a broad brush. "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."

          Maybe I'm bad at business but I pay my employees well over the going rate and *gasp* care about them. There could come a point where, mathematically, I would have to let some go in order for the company to continue in bad times but I would take no delight in it. At some point the goal is to keep a business running unless you think that it would be better if everyone should get fired if you go bankrupt.

        • by phantomfive (622387) on Friday November 11, 2011 @01:34AM (#38020086) Journal
          The article on WSJ.com (Here) [wsj.com] consulted with several lawyers, who generally felt that since this has never been tried before, it is hard to know whether it would stand up in court. I'm going to assume Zynga consulted with their own lawyers before trying this trick.

          Apparently the reason they used this trick instead of diluting the shares is because they didn't want to dilute all the shares (well, maybe they did that too), they wanted to get stock back from a few employees (it seems mainly executives, actually) who were 'non-contributors.'

          Still seems like a lame move. When the money flows like it does from an IPO, let it flow to everyone. When you have a billion dollars coming in, paying the lowly janitor a million isn't going to hurt much. Be generous.
      • by JoeMerchant (803320) on Thursday November 10, 2011 @09:59PM (#38018924) Homepage

        Also, the cited reason "we want to avoid a Google Chef situation" - what is wrong with a Chef making $20M off of working at a high-risk low reward company at the early stages? What did Mark Zuckerburg, or Bill Gates for that matter, do that justifies the magnitude of their fortunes? It's all a lottery, Zynga should be happy for their winners, even the ones who don't look like they deserve it. If those lucky people had all turned their backs on Zynga in the early days, Zynga would probably have failed hard - the promise was to share in potential IPO spoils, keep the promise or have your CEO report to the State Penitentiary for fraud.

        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.

        What's best for the company is to conduct business within the law, meet your contractual obligations. If I would start a plumbing business, hire a bunch of journeymen plumbers for stock, then claw back the unvested shares from the low performers because it's "better for the business" to make those shares available to new plumbers who might perform better, what would the judge say to that?

        Also, what lowlife idiot would sign up for a promise of stock from a company that has already done this to former employees?

    • by Billly Gates (198444) on Thursday November 10, 2011 @09:01PM (#38018488) Journal

      What the CEO who had to work up to 6 whole hours a day in his lavish office with those 2 hour lunches and games of golf shouldn't take the credit. It was his and the upper managements ideas that created the company. Just like all the bank CEOs who work really hard producing things of value we take for granted. They need to be paid for such a hard life and creating all sorts of innovation. Thoughts magically create products and they call come from managers, directors, and CEOs only! Get with the program and when I say work you say minimum wage, you are costing the shareholders money!

    • by dlcarrol (712729) on Thursday November 10, 2011 @09:01PM (#38018490)
      That's a false dichotomy. The choices are (1) give (some of) the UNvested shares back and don't get rich, or (2) get fired, forfeit all of the UNvested shares, and don't get rich. I hope the IPO punishes them for this.
  • Fearing the chef. (Score:5, Insightful)

    by Anonymous Coward on Thursday November 10, 2011 @08:57PM (#38018454)

    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?

  • by Fluffeh (1273756) on Thursday November 10, 2011 @08:59PM (#38018468)

    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.

  • by alostpacket (1972110) on Thursday November 10, 2011 @09:01PM (#38018492) Homepage

    Were they really upset about that guy? Sounded like he did top-notch work from the Wikipedia references.

    • by Destoo (530123) <destoo&gmail,com> on Thursday November 10, 2011 @09:58PM (#38018912) Homepage Journal

      One of the first financial press conferences before (after?) the google IPO was by their CFO.. Chielf Food Officer, back in February 2005.
      Google was proud of announcing the number of eggs they were cooking each day for their employees. Wall Street was pissed by their lack of respect.

      They had a formal presentation by their chef but not their chief financial officer,” said Mark S. Mahaney, an analyst with American Technology Research. “I have never been to an investor day where the C.F.O. didn’t speak.”
      Indeed, Google’s top chef, Charlie Ayers, spoke to the assembled analysts and investors about the lunch he had prepared, featuring entrees like grilled pork tenderloin. The chief financial officer, George Reyes, moderated the presentation and answered a few questions, but did not give a formal talk.

      http://www.nytimes.com/2005/02/10/technology/10google.html?ex=1266123600&en=60d19019bb842d20&ei=5088&partner=rssnyt [nytimes.com]

  • by klui (457783) on Thursday November 10, 2011 @09:05PM (#38018524)

    Next thing you know, their employees would be asked to pay back portions of their salaries that management thought are undeserved.

  • by qbzzt (11136) on Thursday November 10, 2011 @09:09PM (#38018550)

    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?

  • by deecha (410960) on Thursday November 10, 2011 @09:13PM (#38018582) Homepage

    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 ?

  • My father said (Score:5, Insightful)

    by buss_error (142273) on Thursday November 10, 2011 @10:25PM (#38019046) Homepage Journal

    "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."

  • by Anonymous Coward on Thursday November 10, 2011 @10:42PM (#38019132)

    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.

  • by dbc (135354) on Thursday November 10, 2011 @11:03PM (#38019270)

    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.

  • Grim Trigger (Score:4, Informative)

    by epine (68316) on Thursday November 10, 2011 @11:17PM (#38019362)

    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 [academicearth.org] 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 [grimtrigge...theory.com] 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.

  • by Weaselmancer (533834) on Thursday November 10, 2011 @11:28PM (#38019414)

    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?"

  • by Skapare (16644) on Friday November 11, 2011 @12:47AM (#38019862) Homepage

    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.

  • If I get fired... (Score:5, Insightful)

    by monoqlith (610041) on Friday November 11, 2011 @01:55AM (#38020172)

    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.

  • by Liambp (1565081) on Friday November 11, 2011 @03:50AM (#38020682)

    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?

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