
Zynga to employees: Give back our stock or you'll be fired - rbanffy
http://news.cnet.com/8301-13506_3-57322150-17/zynga-to-employees-give-back-our-stock-or-youll-be-fired/
======
mmaunder
Sometimes you just have to sue to enforce a contract and your rights. Many
employees either don't realize this or they don't have the stomach for it. If
you find yourself in this position, my advice is to play the game and see it
through.

1\. Don't resign, don't capitulate and hire a good lawyer immediately. If you
don't have the cashflow, but are defending a huge pile of stock about to IPO
you'll probably find a lawyer that will defer payment.

2\. Start documenting everything including making timestamped notes of what
was said to you verbally.

Then play it out. Read all documentation the company has given you and fully
understand it. They usually have to fire you for cause for you to lose your
options, so figure out what the angle is they're using and make sure they
don't have cause. Be 100% professional and non-confrontational, but ask the
hard questions when you need to. DO NOT treat the company's staff (including
your boss) or their legal team as your own legal counsel. They will try to
give you "good advice" or intimidate you. They will claim things are
"standard". Get your own info and use your own lawyer.

Often simply retaining counsel lets the opposing team know you're serious and
professional, and worst case it will up any settlement.

PS: I'm an exec, not an employee, so technically I'm the guy on the other side
of the org chart that Micah (see below) is describing. But assuming the report
is accurate, this is unacceptable behavior and I'd like to see more employees
who take a risk on startups getting what they deserve and enforcing their
rights.

~~~
grellas
What Zynga is doing is pretty repulsive, as I previously commented in a
related thread (<http://news.ycombinator.com/item?id=3219437>), but it is not
accurate to say that "[t]hey have to fire you for cause for you to lose your
options."

The overwhelming majority of employees at startups sign documentation
acknowledging that their employment is at will and can be terminated at any
time by either party for any reason, with or without cause. In relatively rare
cases involving founders or high-placed executives, the company will sign
contracts stating that, though the employment is at-will (i.e., can be
terminated at any time for any reason without liability), the employee will
get accelerated vesting of one sort or another in the event of a termination
"without cause" or a resignation for "good reason." "Cause" is usually defined
as willful failure or refusal to perform duties that continues after notice
and an opportunity to cure, misappropriation or misuse of company trade
secrets, commission of a felony or other action involving moral turpitude,
etc. and "good reason" is typically defined as material reduction in
compensation or duties, relocation to a remote area, etc. If you have an
employment agreement that provides for such acceleration, then you are clearly
protected against the Zynga-style threats described in this piece. If you do
not, then you generally are _not_ on firm legal footing but still may have
some fighting chances.

What are those? If you can argue that an otherwise permissible at-will firing
becomes impermissible because it is animated by discriminatory animus (race,
sex, age, etc.), and you belong to a protected class, you could argue that the
threatened firing is illegal and would subject the company to damages (which,
of course, would include the value of the unvested stock that would otherwise
have vested had the company not acted illegally to terminate your employment).

If you can argue that the ground of termination violates public policy, this
might be a separate basis for claiming that the firing is illegal,
notwithstanding that the employment relationship is at-will.

If you can argue that the company has given you implied promises that your
employment would be for a certain duration, this also might take it out of the
at-will category and give you fighting chances.

If you can argue that you were induced by fraudulent misrepresentations, e.g.,
to leave an existing employment based on the promise of equity compensation,
or if the at-will language in your agreement is defectively implemented, or if
any other ground might exist by which you can legally claim you got cheated or
had some promise made to you breached, all this too can take this out of the
pure at-will category as well and give you a basis for leverage.

To sum up, "cause" is not usually needed by an employer to terminate
employment and recapture unvested equity. But you also by no means
automatically lose just because your employment is at will. This is a complex
area. With a lot at stake, it pays to get good legal advice to see if you can
find a good angle by which to protect yourself.

A good legal case depends on legal rules that support it and, even more
important, on good facts that motivate judges, juries, and anyone else looking
at the case to _want_ to go in a certain direction. Here, Zynga is providing
all the good facts an employee needs to motivate people to want to slap them
upside the head. That by itself is not enough. But if you find even one legal
hook that gives you a sound basis upon which to attack what they are doing,
then you can stand and fight. It is not easy, but sometimes you have no
choice.

~~~
prpon
_Cause is usually defined as willful failure or refusal to perform duties that
continues after notice and an opportunity to cure, misappropriation or misuse
of company trade secrets, commission of a felony or other action involving
moral turpitude, etc. and "good reason" is typically defined as material
reduction in compensation or duties, relocation to a remote area, etc._

When a company decides to terminate an early engineer because the 5% they
agreed at the start is deemed too high for an engineer, usually the reason
given is 'non-performance'. Even though the engineer is performing his
engineering duties.

Does a company need to prove that the engineer failed to perform and document
it? or is it usually the company's word against the engineer's? What stands up
in the court of law as 'failure to perform duties'?

~~~
grellas
It is very hard for a company to prove willful failure to perform duties when
an engineer is actually executing on assigned projects, or at least attempting
in good faith to execute. Engineers who have contractual protection against
termination without cause are usually well-protected against arbitrary
terminations on "non-performance" grounds and the company has to do a lot more
than loosely assert (in "he said / she said" fashion) that someone's
performance comes up short. Moreover, in most cases, the contract clause will
specify that, in order to effect a termination on this ground, the company
must give notice to the employee specifying why the performance is inadequate
and give the employee a window within which to cure any defects in
performance. This makes it doubly difficult to terminate someone on non-
performance grounds because the charges have to be detailed and there will
always be an argument about whether any deficiencies were cured if the
employee is actually trying to perform all assigned duties. The company can
try to document such cases all it wants but will normally hold a losing hand
in trying to prove "cause" on that ground in such cases.

The Zynga cases are different, however, because the employees being squeezed
in those cases are almost certainly pure at-will employees who have no
contractual protection against being terminated without cause. Without the
contractual protection, such employees can be terminated for pretty much any
reason in the normal case and, if "non-performance" is cited as the reason,
the company does not need to prove anything to back this up. "Non-performance"
in such cases is often nothing more than a label used to rationalize a
decision made on who knows what ground (e.g., on the ground that the company
just wants to get someone's potentially valuable stock back before it vests).

~~~
johnyzee
What about the 'bad faith' argument presented in the sibling comment?

> _[...] Kmart’s discharge was in 'bad faith' and that, even without a
> contract, such a termination gave rise to tort liability. The court agreed
> [...]_

~~~
electromagnetic
If you had clear reasoning that you was dismissed for a reason other than
failure to perform duties, then you would have cause to sue.

FTA two people already retained council, settled and still got to keep a
portion of their stock.

What Zynga is worried about is that if they're going to be publicly valued at
$1 billion, the guy who owns 5% of stock because he was there from day one is
going to land $50 million and walk.

I imagine that the biggest problem with IPO's for companies like Zynga
(especially if they're acting douche to their employees) is that they risk
losing a lot of employees. Either selling up stock to get the cash, or simply
retiring to live off dividends and slow-stock sale tactics.

------
danilocampos
Wait a minute.

What just a damn minute, here.

Are you telling me that a company that cheerfully built itself on shady shit
like un-removable browser toolbars might continue screwing anyone it wants in
the furtherance of its leaders' avarice?

I am shocked.

Look, it's endearing when people have scrappy stories about their origins. We
all act out of desperate vigor when we're up against the wall and far from our
goals. But there's a difference between being scrappy and being a swindler.
Scrappiness transmutes into strength and informs your company's values.
Swindling, on the other hand, is almost always forever, and informs values in
a much more negative way.

A swindler will knife you at the first lucrative opportunity. Avoid them. Do
not work with them or for them. They are Aesop's scorpion. Deal with honest
men and women instead. Perhaps their purses are marginally smaller – but
that's because they won't go rummaging through _yours_ when your back is
turned.

~~~
Androsynth
Is it ever that simple? How can you know a person's moral character just
through a job interview? What about if you were Zynga employee #50 and Pincus
didn't even interview you, but the company wasn't big enough for TC to post
about it's shadiness? What if an honest man gets tempted by 9 figures in a
once in a lifetime situation?

~~~
danilocampos
It may be more simple than you guess!

If dishonesty has infused a company's DNA, that's often something you can
feel. Values cluster people together, so a founder with... shall we say,
ethical flexibilities, will often surround him or herself with others of
similar persuasions.

So I'd say it trickles down. You get a vibe. I've met people who I'd never
want to work with only because of the spidey sense tingling, you know? Nothing
I could put my finger on. But unsettling enough to be a deal breaker. You
gotta trust these things.

I'm not saying it's easy, or even fair. Plenty of these guys are honest folk
getting screwed, I'm sure. But you must be vigilant to work with those who
share your values.

On the other hand, anyone who joined Zynga _after_ their dishonesty was laid
bare should not be surprised at the outcome. Again, still not right or fair.
But there was the warning.

~~~
forensic
It reminds me of a cult. "They seemed like such nice people!"

------
MicahWedemeyer
_In order to determine which employees would be asked to give stock back,
Pincus and his executives tried to pinpoint workers whose contributions to
Zynga--in the execs' eyes--didn't necessarily justify the potential cash
windfall they could receive when the company went public_

I'm going to take a wild stab here and guess that none of their own names were
on the list they came up with.

Whenever crap like this happens, pull out an org chart. You'll pretty much be
able to draw a straight line that divides who shits and who eats shit.

~~~
jsavimbi
This happens everywhere. Employers let the flotsam sit around for months, even
years, configuring servers or generating a slide deck and when time comes to
shell out cash as either a reward or through compensated attrition, they'll
pull out that long-dormant knife and stick it into an unsuspecting recipient's
back.

That way the don't have to over-compensate the performers beyond what they've
already promised them.

~~~
ohyes
This is totally true.

Your employer is not there to do you any favors.

Most likely, they will knife you in the back the minute they get the chance.

~~~
lemming
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.

~~~
Androsynth
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 of crap in those types of
situations.

~~~
jsavimbi
You can always hire a relative/mistress to a no-show/do-nothing job and
further dilute the option pool in your favor. It's easier on the conscience as
you effectively cancel the stealing out by adding to the employment rolls.

Beware the shuffling of chairs, granting of titles, lateral promotions,
unannounced appearance of new employees cutting back on company snacks. These
are all clues that lead to a financial event where unless you're in the
driver's seat, you're bound to take a hit.

For those of you with the altruistic bent, please watch the Spanish Prisoner.
It's a classic example of fuckery.

------
cheald
This is really, really sleazy.

The bottom line here is "You don't get to be a part of the IPO windfall."
Given that the employees that are getting stung like this have accepted the
risk of working at a startup, and likely have accepted lower salaries in
exchange for the promise of stock options, this is morally equivalent to theft
of services.

Stock as a compensation structure only works when people use it in good faith.
Scummy moves like this are only going to make it harder for startups to
attract talent unless they can pay full market rate right out of the gate.

~~~
danssig
Actually, given the instability of a startup, they should be paying _more_
than market rate right out of the gate. They tried to do this by using stock
options but enough crooks have found ways around it that I expect the labor
market to adjust to this.

------
jacquesm
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 wrongful termination _and_ they lose their best employees
(those that have options).

Prior to an IPO you make sure you don't 'rock the boat' and you make sure that
your management team is seen as competent and playing by the rules.

This is neither and I really wonder who is advising them to take these steps.
They are hurting themselves in just about every way that I can think of, they
look incompetent and sleazy, neither of which is the kind of company that
you'd want to invest in.

The IPO cake should be large enough for everybody to share, there is
absolutely no need for stupid tactics like these.

~~~
tatsuke95
IANAL...

...but I'm sure Zynga has some good ones. I don't think they're trying to
annul the contract. Essentially, they're saying that these employees are
underperforming, and thus they have the right to fire them "with cause". If
they straight up fired the employees, those employees would lose out on their
unvested shares. They would have nothing. Instead, Zynga is saying, "Give some
back and you can stay."

Low and shady. Should we expect anything less from this company? The bright
side is, they avoided a mass-firing (likely because engineering talent is
still tough to find).

~~~
jacquesm
I am not a lawyer either, but saying 'give some stock back and you can stay'
would make a wrongful termination suit a slam-dunk.

Announcing it (especially to multiple employees) is about as dumb as it gets.

~~~
doyoulikeworms
Indeed. What I wonder is how they decided that they'd come out ahead on this
one.

Did they really think it'd be cheaper for them to pull this shady stuff? I'm
almost certain that firing the alleged under-performers, including the
subsequent cost of the inevitable wrongful termination suits, would be
desirable over the shit storm they chose to stir up.

------
redthrowaway
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.

------
mtkd
Stories like this reduce the value of stock for all companies who issue it -
most with good intentions - and leave our community morally poorer.

So what if a chef in an early stage team made out with $20M later - an army
marches on it's stomach - he probably contributed more to delivery than some
of the management team at the time.

~~~
raganwald
Even if the chef didn’t contribute as much as others who took home M$20, is
Pincus is really claiming that: “We don’t want to make the mistakes Google
made: Look how badly things turned out for them!”

?

Somehow, that doesn’t seem like his best work as a CEO...

------
saalweachter
I wonder if any early Google employees begrudge Charlie (he's the "early
Google chef", right?) his millions.

An army travels on its stomach. Google's chefs helped make Google the company
it is today. Why is it so wrong that they be rewarded?

~~~
api
There is risk associated with working for a startup. Risk that you will
suddenly lose your job. Risk that you will lose your health insurance two days
before one of your kids requires an operation. It's a level of risk that
doesn't exist if you work for the government or some big mega-corp.

There's also a level of buy-in that startups demand. You're asked to make it
more than "just a job." Even the guy mopping the damn floor is asked to mop it
until it shines, just because "we're all in this together."

People deserve to be compensated for that if things go well. But to your
stereotypical business sociopath only executive-level individuals and their
cronies are real human beings. (Actually, nobody is a real human being. It's
only about winning in the shortest possible term.)

And I'd be willing to wager that these particular executives were more of the
empty suit, posturing, clueless, "let's do lunch," "I'll have my people talk
to your people," variety. There is a negative correlation between actual merit
and this kind of behavior.

~~~
goatforce5
> Even the guy mopping the damn floor is asked to mop it until it shines, just
> because "we're all in this together."

Guy I used to work for said one of his proudest moments was hearing the
receptionist at the company he had founded was able to buy a house outright
with cash from the proceeds of her stock options.

~~~
api
Sounds like he didn't "have what it takes."

------
wpietri
I am entirely in favor of this. Mainly because I'm four blocks away and am
trying to hire engineers.

Seriously, it's bullshit. It makes me mad not just for the people getting
screwed, but for the whole industry. The whole point of giving somebody early
equity is that it's a gamble. Sometimes it's worth nothing; sometimes tons. If
companies start doing it in a heads-I-win-tails-you-lose fashion, then that
really reduces the value of the equity as an incentive.

Zynga isn't just hurting their employees; they're hurting every early-stage
startup that comes after them.

~~~
muyuu
This is exactly what I was thinking.

If Pincus succeeds with this, startups as a whole and this kind of
compensation in particular will look much worse.

------
bitops
I was given some advice recently by someone more senior than me: "in the
Valley, equity nowadays is worthless. Show me the money!".

That's played itself out as true so many times it's basically become a rule.
Equity means absolutely zero for most people - salary, vacation time, health
benefits - these are now the selling points for companies in my eyes.

Stuff like this just proves that equity is way too unreliable unless you're a
founder or exec. And Zynga runs a slave ship to boot.

------
johngalt
Zynga is aiming squarely at their feet and firing a cannon.

Would you invest in a company where management is obviously looking for a
short term cashout at the expense of the future success of the company? The
future success is _precisely what the investor is buying_. It's like buying a
car while the seller is _actively pulling parts out of it_.

The results of this will be reduced share values combined with lawsuits eating
up any potential gains.

~~~
slavak
I was also wondering about this.

A few people here commented that this is obviously a move by the execs to claw
back as much stock as possible for themselves before the IPO in order to ditch
it and run. On one level, this sounds realistic. But you have to wonder: Isn't
taking this kind of action so close to the IPO just going to put their stock
price into free-fall? Did they simply not expect this kind of headlines, or
maybe I'm overestimating the amount of exposure this is going to get outside
the HN community?

~~~
johngalt
I've got no doubt the execs still make more overall, but how much more? And is
the difference worth their name? We will never really know the answer to this
question.

Likely they picked a minority of the employees, and there will be a lot of
unfair pressure on them not to "rock the boat" from the rest of the staff. So
if the employees take it lying down I don't think much will come of it.

Conversely, if it blows up into a full class action. Then Zynga could be in
trouble. You'll have newspapers running statistics like "X% of people who got
ripped off are convieniently minorities or women".

------
typicalrunt
Company stock is basically ownership, and there's a dollar value attached to
it.

So is does Zynga's request run into the practice of extortion? It's another
way of saying, give us your money or else something bad will happen.

~~~
skmurphy
CA law provides for at will employment but if the original option was not
contingent on specific performance beyond what is needed to continue as an
employee, and they are willing for the employee to continue working there
provided they surrender their stock they may be in more of a gray area. It's
in the nature of a targeted pay cut but it doesn't seem to involve a demotion
or change in position, they are effectively approach certain employees and
telling them, "we are paying you too much, accept a reduction in your total
compensation or we will terminate you."

~~~
davorak
I would agree with the analogy if the stock compensation was payed out along
the way.

I think it is more akin to "we are not satisfied with your work on the
contract we are taking what you have produce so far and are only going to pay
you a portion of the original agreed upon amount."

~~~
skmurphy
In effect it is paid out along the way, that's the effect of the vesting
schedule (whether it's options vesting or buyback rights terminating each
month).

------
cageface
Is it just me or is tech particularly sleazy right now?

~~~
api
Very. It's bad.

I kind of got out of startups for that reason. I just couldn't take working
with sociopaths anymore. I have some stories. Serious f'ing stories. And no,
I'm not just "player hating." A lot of it didn't even involve me. I just
couldn't take working in proximity to such sleaze.

Tech's had this reputation as a place where fortunes can be made. That's going
to attract a lot of ambitious and creative people, but it's also going to
attract a lot of scum.

What amazes me about my personal experiences is how unsuccessful a lot of the
sociopathic behavior was. It really brought home to me that these people have
a mental illness. In the same way that someone with severe OCD will do things
like wash their hands until the skin comes off, these people are neurotically
_compelled_ to dominate others even if doing so actually harms them. They
_must_ win their petty battles and dominate those seen as weaker, even if it
means losing in the real world.

I literally watched the moment at which a pathological sociopath tanked a
million-dollar opportunity because he _had_ to try to put one over on his
partner. _Had to._

~~~
pavel_lishin
Would you be willing to do an anonymous AMA, or write up some of your
experiences?

~~~
api
I'll do a quick summary.

Episode 1: (this is the one that most directly affected me)

I was working on a very interesting but somewhat far-off technology. I did
some tech talks about it, and put them on Google Video. Was approached by a
guy who said he was a wealthy early-stage technology investor. He showed me a
lot of stuff that indicated that this was the case, had a lot of real people
vouching for him, etc.

He made me an offer of a cash investment over a period of two years in
exchange for a percentage ownership in a company I would create. I got a
lawyer, did a contract, and was very excited. We'd work with early stage
customers, iterate, and he'd support the hiring of two additional people to do
R&D work. (The technology was a machine learning application.) He even had
some existing customers lined up and interested in bio-medical, oil and gas,
and other industries.

Came to find out that: a) this guy has _almost no money at all_ and is a
complete fraud, b) everyone he associated with literally has a different
picture of reality. It was pretty amazing. Some people thought he was
associated with a company that he only acted as a salesman for, for example.

I walk. In doing so I have to walk away from approximately three years of work
because the ownership of said work is now tied to an entity that this guy
_could_ have a potential claim on.

Guy turns out to also be a f'ing lunatic. He threatens my life verbally. I
contemplate buying a handgun.

Episode 2:

I meet a promising entrepreneur who is interested in bio-med stuff. He's
working on a protein classification company. He asks me if I'd be interested
in joining as a software engineer. I say sure.

He sends my resume out to his investors, only he's listing me as having
degrees I don't have. I e-mail him about this. He asks me to personally write
up a CV and coaches me on how to pad my resume.

I walk.

Episode 3:

I join a consulting firm that does early stage tech R&D and business
consulting for startups. This one involves me only indirectly, but while there
I get to witness several pieces of rather astounding sleazery.

One episode involved a company that was formed to build a video delivery
device. We did a bunch of R&D for them. They were basically a sales pit:
founder was a salesman, and he hired a bunch of salesmen to go sell ahead into
the market and hired us to build a prototype. (Nothing wrong so far.) But the
market didn't seem to be too interested, so he pulled the plug. Walked. Left
our firm with almost $100k in uncollected bills. We do some investigation and
find out that this guy's name is on over a dozen defunct LLCs.

Another episode involved a guy who was "known" as a "genius," a "business God"
as one person called him. In this case we did actually get paid, but... the
guy was a complete f'ing lunatic. He would berate and insult his employees,
sexually harass women, and we come to find out that he'd been sued multiple
times by previous partners. We were lucky to get paid... mostly because
someone other than this guy was footing the bill. (That someone later pulled
the plug.)

Consulting firm shutters its doors. I can't blame the guy. I mean... I didn't
have to actually negotiate with these pricks. I just worked for the place. He
did.

Episode 4:

Join a startup doing mobile devices. We get funded to develop something, and
we're on the verge of making a sale, when the parent company decides to pull
the plug. We were inches away. Millimeters away. Then the parent company
decides to screw over our development partner.

That's it. I'm out. No more startups for me, unless it's my own.

Now here is my question:

 _Do they actually teach this s--t in business school? What the hell?_ I had a
friend when I was much younger who got into some shady stuff including drug
trafficking, and he told me a lot of stories. None of them approached what I
experienced in the "legitimate" business world.

~~~
ohyes
> Do they actually teach this s--t in business school? What the hell? I had a
> friend when I was much younger who got into some shady stuff including drug
> trafficking, and he told me a lot of stories. None of them approached what I
> experienced in the "legitimate" business world.

I have to ponder that if one made a habit of screwing people over in the drug
trafficking and/or shady business, the individual might end up with a
shortened life expectancy.

~~~
api
Yeah. An armed society is a polite society.

~~~
fapi1974
Hey - if you're interested, I could use your story! Check this out:
<http://news.ycombinator.com/item?id=3220610>

Ping me on email!

------
tzs
So a company whose business model is based on the notion of ripping off actual
game companies is also unethical with its own employees? What a completely
unshocking development.

------
lukejduncan
"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."

~~~
prodigal_erik
And now we know what a promise from Zynga is worth. It's hard to see a bet
that _won't be permitted to pay off_ as anything other than a way to lure and
then defraud employees. I think it's time to start insisting on accelerated
vesting if you want anyone to take your option offer seriously.

------
a5seo
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, is dead to anyone with the slightest
amount of common sense going forward.

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

~~~
rhizome
_It's like this guy can't help but be evil._

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

------
justin_vanw
What if Pincus he had just fired them, with the reason being that they were
not earning their compensation? It seems reasonable to fire someone if they
are not pulling their weight? Giving them a choice seems unfair, but how is it
worse than just being fired?

I think this is just Pincus being a nerd and over rationalizing the situation,
instead of just decisively 'pulling the trigger'.

On the other hand, these people were given an offer of X% of the company in
exchange for taking lots of risk early on. They took the risk, and now that
the value of the company is greater, Pincus is taking the incentive back. So
Pincus offloaded personal risk (paying lower salaries + stock instead of just
paying market salaries) and then when the risk was gone he is canceling his
agreement. I would never trust this man.

~~~
joshz
Perhaps because they were earning their compensation and new employees would
just be too expensive, since Pincus didn't want bait them with anymore
(possibly no longer worthless) stock. Might as well try to squeeze it out of
current employees knowing that finding a new job can be a bitch.

------
tjcrowley
I worked for Pincus at tribe.net when he was letting it circle the drain, The
users petitioned me to create a subscription system to save the site and the
first month it raised $30,000. Of course, that all disappeared and a short
while later Zynga put out their first game. What do you think happened there?
It's continually flabbergasted me that anyone would invest in his company when
he has a long long history of ripping people off. Nowadays he's got multiple
mansions, multiple private aircraft, and multiple high priced lawyers. Our
only hope is that some of these Russian investors are actually mobsters that
will kneecap him when the IPO flops.

------
api
What a bunch of assholes. Seriously.

------
run4yourlives
Interesting to note that in Canada, this would fall under "constructive
dismissal" and would mean that Zynga would be liable to pay the same severance
as they would if they just decided to lay people off. Legally - 1 week's pay
for every year of service, plus whatever the court thinks is fair.

Altering an existing contract and threatening to terminate said contract if
the new terms aren't agreed to is a really assholish thing to do, to be
honest.

If Zynga employees were smart, they'd band together and threaten to quit -
immediately, with no notice - en masse. You need to negotiate from whatever
positions of strength you can obtain.

Either way though the company has now been poisoned beyond repair... good luck
attracting any top talent from this point forward.

------
gm
Old news, see here for comments: <http://news.ycombinator.com/item?id=3218774>

~~~
cienrak
yeah complete rehash.

------
muzz
How did several employees have equity of more than 1% of the company??

Even in a heavily equity-based compensation package in an early stage startup,
anything over 1% is usually reserved for VP-level if not C-level executives,
as the entire employee pool is usually only 20-25%

Per WSJ: '"Some of these people were sitting on over $200 million and close to
1% of the company" when fully vested, said one person familiar with the list
that was compiled.'

[http://online.wsj.com/article_email/SB1000142405297020462190...](http://online.wsj.com/article_email/SB10001424052970204621904577018373223480802-lMyQjAxMTAxMDAwOTEwNDkyWj.html)

~~~
api
Because they made inflated stock awards to lure in the suckers, then canned it
at the last minute. It's classic.

------
timdellinger
I know that no one ever gets credit for "I told you so", but last year I
pegged the 4-year vesting schedule as risky, and wondered why we didn't see a
lot more people being fired just to recapture their stock options:
<http://news.ycombinator.com/item?id=1733107>

To me the riskiest part is that you never know how a business is going to
pivot, who might end up owning it, etc., so the idea that you'll still be
working there in four years is in many ways kind of silly. It always seemed
worthwhile to me to negotiate other incentive. Hopefully stories like this
will help change the culture a bit so that other forms of incentive become the
norm.

~~~
danssig
Well, to be honest, I'm torn between my disgust at these scumbags and my lack
of pity for people who were working at _Zynga_. I mean, the place never tried
to hide the fact that they were a bunch of scumbags as far as I know. If you
know their whole business depends on customers not understanding it, why
wouldn't you expect them to treat you the same? They've already shown a clear
contempt for people who aren't them. Do you honestly think they see you
differently?

------
Nelson69
Wouldn't there be other ways to pull this scam off? Perhaps less outwardly
visible ways?

Assuming the board is on board with the plan, why not do some sort of stock
dilution and re-issue preferred shares or something like that? Conventional
wisdom would dictate that the last thing you want going in to an IPO or M and
A is some goofy accounting on the books but the last few years make me think
Goldman and company are really really good at deciphering that and more than
accepting of the practices.

With all the things I've heard about game companies in general and then Zynga
itself, it's a wonder that the game industry keeps moving forward. There is
always fresh meat though.

To the Zynga folks... I don't know that you'll be able to lawyer up and fix
it, I just don't think the laws will be on your side and there are too many
loopholes. However, possibly building a coalition and contacting Communication
Workers of America or something similar might make a larger impact, assuming
you can build a coalition... Distasteful as I think it is, I think it might be
your best option.

------
pavel_lishin
> With the unvested shares, the executives believed they could attract more
> top talent with the promise of stock.

What sort of top talent will have not read this story and decided that surely,
THIS TIME, Zynga won't screw their employees?

------
ojbyrne
So I'm curious why they didn't follow the standard Valley way of dealing with
this - issue enough new shares and grant them to everyone but the people on
the "hit list."

~~~
cellis
Probably an anti-dilution clause prevents that.

------
exit
developers should blacklist companies like this. sort of an informal union.

with the right personalities behind it we could do serious damage to the
sleazy conniving wheeler-dealers who pull this shit.

~~~
api
And you'd instantly be sued for libel, slander, and tortious interference with
business relations.

~~~
alexwolfe
Last time I checked, Unions were legal. For that matter not liking a company
is legal too. Not wanting to work for someone, also legal. My friend not
wanting to work for someone I don't like, also legal. Not liking a companies
policies, ummm also legal.

~~~
forensic
His point is that you would get sued anyway to intimidate you.

The people suing you have more money than you and lots to lose. They would
just try to drag you into an expensive and endless legal battle hoping you
could not afford it.

------
prostoalex
Important to note this applies only to _unvested_ stock.

I'm not defending the move, but in reality the company could terminate the
employees (at-will employment in California), which would terminate their
further vesting anyways.

This is not the clawback scenario that Silver Lake executed with Skype.

~~~
alex_c
Terminating employees only to avoid their stock vesting - as opposed to valid
performance reasons - is just as scummy.

I also can't see how employees who give up their stock and remain with the
company can possibly have a healthy relationship moving forward.

------
fragsworth
News like this damages the startup community, especially in game development.
Lots of potential employees already have a sense that stock is "worthless
paper" and this Zynga stunt just exacerbates the problem.

This could end up like what happened with Activision and the CoD guys.

------
benmathes
ethically: equity compensation for a lower-than-market-rate salary is
effectively an investment by the employee. They give up potential funds for
equity. This includes unvested equity in the investment since, in the
beginning, it's _all_ unvested.

If you take back some of that equity with no commensurate repayment, then fuck
you.

------
thegorgon
This is par for the course for Zynga who have made a successful company by
stealing the lunches of creative companies and developers.

Don't be surprised when an evil company acts evil. Just don't work for evil
companies.

------
benjaminRRR
It is incredibly sad, and often repeated. Greed makes people do really short-
sighted, horrible things. You can't take all that cash with you when you die,
but you can leave a legacy. Do you really want to be known as the guy who
wasn't happy with his lazy $1.8B and needed to squeeze the little guy to find
a couple million dollars. People take a risk on startups, and we should be
celebrating the "google chef" phenomenon. If the chef is walking away with 8
figures then things are going very well indeed.

------
apechai
Let's give them a taste of their own medicine. They grew off exploiting the
Facebook feed and twitter.

I started #boycottZynga on twitter. Please retweet. If we get the message out
and convince people to stop playing before IPO, we can hurt their valuation.

Then they'll realize they can't just bully normal people.

------
Timothee
I know that employment is at-will in California, but you can still sue for
wrongful termination in some cases.

Could this be happening in this case?

I read the beginning of this page ([http://www.ca-employment-
lawyers.com/Wrongful-Termination.ht...](http://www.ca-employment-
lawyers.com/Wrongful-Termination.htm)) and it seems to depend highly on the
contracts and employee handbook that Zynga have.

In any case, you would think that this should make hiring talents more
difficult…

------
kamaal
This is probably one the hidden chess moves any start up can make once they've
used you up like tissues(to use and throw). Of course once they have
sufficient money and sales oriented CEO and senior executive staff, in the
name of _that's better for the company_ they can do anything they want.

This is one of the things that scares me about working at a start up. Remember
the early employee is spending his time and compromising on his salary for
that stock. And pretty obviously he works his heart out to make the company
successful. Dumping them just like that, once you've squeezed the juice out of
them seems a very unethical thing to me. And this is one of the things that
actually prevents some good folks from working at a start up.

The worry that you will used like a work horse during the tough days of the
company and then later dumped when the CEO sees a he can add another million
to his account by dumping you is a major worry for any good person to work at
a start up.

One thing that needs to be realized that not every body in the start up area
is in for _passion for software_ or _changing the world_ thing. You have to be
careful before deciding to work at some place. Doing a little back ground
check on the founders will help.

~~~
danssig
Simple solution: never make that compromise. A bird in the hand and all that.

------
ggchappell
One of the paragraphs in this article is mysterious:

> The Journal cited two employees--one who has left Zynga and another that
> still works with the company--who hired attorneys to reach a settlement that
> saw them give up some, but not all, of the unvested shares.

Why would a former employee give up shares? Current employees were threatened
with firing. But I don't see what hold Zynga has over this person. Why not
just keep all the shares?

~~~
alexmr
I read that as one employee left after the threat was made, and the other
stayed.

------
NHQ
Boss: Give me money or be fired.

Employee: Peace out sucka!

 _later_

Bosses: How do we attract and keep top talent?

------
thesz
This is so stupid it jusst hilarious.

So Zynga takes away shares from some people they considered top talent. It
lets situation to became public. Then after all that moves it hopes to attract
more top talent.

I cannot help myself laughing.

This really made my day. ;)

------
shad0wfax
Pathetic. Very disappointed to see this. This is the cancer that sets the
stage for other startups as well.

How is one supposed to decide which startup to work for and at what stage in
the startup to join? I liked the 37Signals principles when and IF they ever go
IPO/cash out. I think the VC community needs to push for such a clean and
transparent model (Wishful thinking).

------
unreal37
I think one thing that is being overlooked is that the assumption is that
these employees are "underperforming". And many ask, why not just fire them if
they are.

I bet they are not underperforming in the "fire them" sense. I think the
better word is "undeserving". The story quotes the Google Chef examples. I bet
those early Googlers did not think the Chef was "underperforming", but clearly
Pinkus thinks the chef is undeserving of $20 million from the Google IPO.

So some IT worker, who started early with the company, whose main job is to
install new desktops, and fix the printers, and keep the network secure is
"undeserving" of $20 million from the Zynga IPO, compared to the lead game
designer who designed Cafe World, who Pinkus thinks IS deserving of the same
amount.

It's more about thinking certain people (janitor, secretary, HR, finance,
etc.) are not as valuable to the company as the lead developer or creative
director or someone whose work is public facing.

And it is despicable.

------
Karunamon
How is this not extortion?

------
alexwolfe
Bad experiences with stock options happen a lot in the tech world. I believe
it's one reason that working for a startup doesn't have the allure it once
had. Many are busting there butts and just collecting a paycheck because their
shares have been diluted or rescinded. Starting early with a company now
doesn't mean nearly as much.

------
quattrofan
Seriosly do these execs realise what a bunch of utter douchebags they look
like? I guess they don't care. Personally though I would think twice about
going to work for them, whatever they offer apparently is worthless because
they can change their mind and take it back off you again later.

~~~
hello_moto
They're also a big PHP shop, and keep in mind that this is a game company
where long-hours, OT, crazy demands are "normal". Mix them together and ask
yourself again if Zynga is a place you'd like to work...

------
jlars
Pincus and his financial backers were looking for ways to maximize their own
wallets without having the Skype fallout of firing people before the IPO. This
was simply the reason for the clawback.

If he just fired the people there would have been a big blowback like what we
heard happen when Skype fired a group of employees before the Microsoft
acquisition was a done deal.

Pincus is a ruthless and shrewd businessman. From the co-opted game designs of
others to cutting out some employees from the IPO's rewards, he is definitely
not someone who can totally be trusted. He will do what's best for him.

Skype, Groupon, and Zynga are showing a more cutthroat way of doing business
in SV. The high valuations that their investors entered into these deals are
demanding ways to squeeze out as much of return as possible.

Google, Apple, Microsoft, Yahoo, and the old guard were all about maximizing
both investor and employee shareholder value. Now it seems its mostly about
the investors and some "worthy" "chosen" few.

Be careful!

UPDATE - Come to find out that Silver Lake, the guys behind the SKYPE firing
fiasco, are also investors of Zynga. Please blackball working with any of
their portfolio companies
[http://www.silverlake.com/partners/content.php?page=team-
par...](http://www.silverlake.com/partners/content.php?page=team-partners)

Jim Davidson Co-Founder and Co-Chief Executive Menlo Park Glenn Hutchins Co-
Founder and Co-Chief Executive New York David Roux Co-Founder and Chairman
Menlo Park Alan Austin Managing Director Menlo Park Mike Bingle Managing
Director New York Eric Chen Managing Director Hong Kong, Shanghai Egon Durban
Managing Director Menlo Park Charles Giancarlo Managing Director and Head of
Value Creation Menlo Park Kenneth Hao Managing Director Menlo Park and Hong
Kong Christian Lucas Managing Director London Greg Mondre Managing Director
New York Joe Osnoss Managing Director London Sean Delehanty Director New York
Stephen Evans Director London Tony Ling Director Menlo Park Todd Morgenfeld
Director Menlo Park Simon Patterson Director London Zheng Wang Director Hong
Kong Masao Yoshikawa Director Tokyo Joerg Adams Principal Menlo Park Jonathan
Durham Principal London John Flynn Principal London Adam Karol Principal New
York Karol Niewiadomski Principal London Jason White Principal Menlo Park Lee
Wittlinger Principal Menlo Park Phillip Wood-Smith Principal New York Jason
Young Principal

~~~
jlars
Interestingly enough, these bozos were also backing Groupon as well. We've got
the trifecta - Groupon, Skype, & Zynga.

With the shortage of talent, we have no need to work at company backed by
these guys. Do so at your own risk!

------
tzury
This story brought up to memory the scam-ville post by arrington from 2 years
ago [http://techcrunch.com/2009/11/06/zynga-scamville-mark-
pinkus...](http://techcrunch.com/2009/11/06/zynga-scamville-mark-pinkus-
faceboo/)

------
noncents
The thing that is not clear to me is why nobody has seen fit to call Fred
Wilson out on this. For all of the "scruples beyond reproach" of what I think
I know about Fred (and what I still hope to be true, despite this evidence),
this one flies in the face of reasonable behavior. I doubt that something like
this could (or should) be done so close to IPO that the board didn't know
about it. I'm certain that Fred can't say anything today, due to the
sensitivity of the timing, but that should not prevent people from asking the
question - "where was the board in all this?".

Good God Fred, is this what a reasonably responsible company would do?

~~~
fredwilson
hi noncents - i can't really get into this Zynga thing due to quiet period
issues. but i am not on the Zynga board and never have been. when we made our
Series A investment in Zynga, my good friend Brad Feld took the Series A board
seat representing both our firms on the board.

------
kls
_the executives believed they could attract more top talent with the promise
of stock_

Not now, I would not take it, it would be an all cash deal for me after those
shenanigans. Even if they don't go throw with it, they have shown their hand.

------
drivingmenuts
Can I just say: fuck everything about that?

------
sdh
Maybe the employees of Zynga who weren't offered this deal should sue Zynga
for too little compensation for the value they've created. The hammer should
swing both ways.

------
tghw
"I have altered the deal, pray I don't alter it any further."

<http://www.youtube.com/watch?v=BwF7n8WyOoU>

------
akeck
We have two option clawback stories in six months or so. These actions erode
the trust relationship between entrepreneurs and the technical talent on which
they depend. The expectation that startups will honor the options they give to
the talent they hire is part of the social contract of the community. Reneging
on that expectation will make talent wary of taking on the immense risk of
working for or founding startups.

~~~
simplekoala
Is Skype the first one?

------
neckbeard
Zynga's latest release is called Mafia Wars: Shakedown. Seems somewhat apt.

------
jlars
Pincus and his financial backers were looking for ways to maximize their own
wallets without having the Skype fallout of firing people before the IPO. This
was simply the reason for the clawback.

If he just fired the people there would have been a big blowback like what we
heard happen when Skype fired a group of employees before the Microsoft
acquisition was a done deal.

Pincus is a ruthless and shrewd businessman. From the co-opted game designs of
others to cutting out some employees from the IPO's rewards, he is definitely
not someone who can totally be trusted. He will do what's best for him.

Skype, Groupon, and Zynga are showing a more cutthroat way of doing business
in SV. The high valuations that their investors entered into these deals are
demanding ways to squeeze out as much of return as possible.

Google, Apple, Microsoft, Yahoo, and the old guard were all about maximizing
both investor and employee shareholder value. Now it seems its mostly about
the investors and some "worthy" "chosen" few.

Be careful!

------
netcan
_Zynga executives were especially concerned with not creating a "Google chef"
scenario.

That reference relates to Google's 2004 IPO when one of the company's chefs,
who was hired in the firm's early days, walked away with $20 million worth of
stock after the shares went public._

This is something to take note of. You might be able to see the reality of a
chance to make $X being worth a small fraction of X, but don't expect everyone
else to see it after the fact. If you are relying on executives, judges or
anyone else to see that you were compensated with a lottery ticket worth $1000
and lucked into $20m rather then that you were just somehow compensated $20m
especially if they have an interest in seeing it the latter way, you need to
take into account that they might not.

------
apu
How much power/influence do a company's VCs have to prevent this sort of
behavior? It seems like this reflects badly on all of Zynga's investors as
well, most prominently Union Square Ventures, and I can't imagine that they
would condone this kind of behavior.

------
byrneseyeview
<http://news.ycombinator.com/item?id=3221693>

This is a very relevant alternative view. Money quote:

 _At Zynga, however, Mark Pincus apparently likes to do things a bit
differently. Rather than simply firing under-performing employees and handing
unvested options over to the replacement, Pincus often likes to find another
position within Zynga where the employee might still be able to contribute.
But because that new position was often lower down the corporate totem poll,
Pincus basically wanted to cut the person's compensation by reducing his or
her number of unvested options (vested options were not touched)._

------
utefan001
Any lawyers care to explain the legal possibility of keeping the stock after
being fired?

~~~
brk
IANAL.

They are talking about _unvested_ shares. The employees do not own them or
have a right to exercise them yet. Every standard contract I've ever seen also
includes a clause that shares stop vesting upon employment termination for any
reason.

So, they are basically saying "give up unvested shares, or else we'll make you
give them up by firing you".

~~~
rayiner
Law student about to graduate, but not yet admitted to the bar/not giving
legal advice/etc:

The law does draw distinctions based on the circumstances surrounding a
termination, even in an at-will state. The employee does not yet own the
unvested shares, but they do have a contractual right to them. Terminating
someone just to screw them out of a contractual right you agreed to in a
contract is going to give someone ammo in a lawsuit.

Given its pre-IPO situation, Zynga is in a bad leverage position in the face
of such a lawsuit. They're going to have an incentive to settle just to get
the claims to go away. What they probably should have done instead is to
terminate the employees for performance up front with a generous severance
package and a contractual agreement to not sue the company for improper
termination. But they probably couldn't handle these employees leaving right
now. They wanted to have their cake and eat it too.

~~~
jiggy2011
Interesting, in that case would it not be wise for all of the disgruntled
employees who are about to be screwed over to just refuse to give back the
stock, get themselves fired and then start a lawsuit and assuming they win use
all the money from selling the IPOd stock to start a business that directly
competes with their previous employer?

~~~
rayiner
It really depends on the probabilities of settlement versus winning a suit
versus the costs of litigation, etc. It's probably best for them to just
lawyer up and take their advice. This sort of tactical strategy is what
they're paid to do.

------
dsimms
I have to agree that the reporting was really unclear if the ask was to forgo
unvested options, forgo unexercised but vested options, or give back stock
from already vested options. I assume it's the unvested options under
consideration, since the latter two seem impossible.

Then I've seen no discussion of AMT anywhere. Say you have vested but
exercised options but for currently illiquid stock, and that someone threatens
you with dismissal. You can exercise but then owe a bunch on AMT that you
might not have the resources to cover. Does that make you more likely to go
along?

This makes it seem like an even more hardball move to me.

------
Tichy
"With the unvested shares, the executives believed they could attract more top
talent with the promise of stock"

I suppose that would be "top programming talent" but not so much "top
economics and common sense talent".

------
netcan
The outcome here may become a clarification of what vested shares means. If
I'm not mistaken, vested shares evolved out of the practice of just giving
shares to employees at the start in order to guarantee that they wouldn't just
take the shares and run.

If this is deemed legal it will probably eventually become standard and vested
shares will become negotiable. If this happens, what are vested shares anyway?
What would be the difference between vested shares and just issuing shares (or
options) periodically?

------
Powells
I heard a similar thing over at airbnb

------
nodata
Give back _our_ stock? Interesting phrasing. It's their stock. Give _back_ our
stock. Phrased like the employees took something that wasn't rightfully
theirs.

------
JGailor
I'm a little surprised I haven't seen this on TechCrunch yet.

------
Angostura
From the article: "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."

The answer is simple then - the executive who originally miscalculated how
much stock to give away should be the person who is penalised by having their
options reduced to make up the shortfall.

You know ... for the good of the company.

------
scott_meyer
Stock options have always been valued at the discretion of the board. Zynga is
perhaps guilty of coming up in "innovative" ways of manipulating value but the
end result: optionees get less money than they thought, is the same.

Choose your employer carefully because the treatment you will receive is a
pure test of professional ethics: how someone with power treats someone
without.

------
celticjames
I suspect that none of those employees were planning to stick around after the
IPO anyway.It's sounds like a terrible place to work.

------
mzuvella
Come work for ngmoco, we don't do that shit.

------
adrianscott
Somebody forgot to water their crops... For those of you asking about pre-
purchasing your stock, you can exercise options prior to full vesting, but the
stock is still subject to vesting, so you can lose them through termination
etc., afaik...

------
VladRussian
opening the next card the casino dealer sees that a person's bet is going to
win a lot, so right before placing the card on the table the dealer asks
security to remove the person until the person agrees to share the winning
amount.

------
HiroshiSan
Looks like they've been reading into Steve Jobs' biography a little too much.

------
sdizdar
They can just fire non-performers with stock options? Correct?

Meaning you hire somebody and gave him/her a bunch of stock options, latter on
you figure out he/she is not so good, so you fire. Simple.

Why this shenanigan?

~~~
chwahoo
I think it's the dissonant claims that the employees in question are "non-
performers" but those same employees would be deserving of their jobs if they
were to relinquish their stock options. If they were truly "non-performers",
Zynga should probably let them go. Since they don't want to do that, it seems
that Zynga really just wants to claw back some money.

------
joe24pack
Is Zynga's company motto "B.O.H.I.C.A." ? There is some potential rhyming
there. Surely this could be turned into a lively limerick or a biting haiku.

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

~~~
fennecfoxen
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.

------
zerostar07
Someone takes Mafia Wars too seriously in there...

------
wavephorm

      With the unvested shares, the executives believed they could 
      attract more top talent with the promise of stock.
    

Not anymore they won't.

~~~
alex4nder
The new hires will just need 'no takebacks' written into their contracts.

~~~
api
Never sign a contract with someone for whom you think a contract is necessary.

~~~
neilk
No, contracts are useful even if you trust the other party intimately, because
they spell out, in writing, exactly what is expected of each party. Believe it
or not, sometimes disputes arise even among people who had the best
intentions.

They also allow you to continue to do business even if the other company
changes hands.

I think the point you're trying to make is that if you already don't trust
someone, a contract is not going to save you. That I can agree with.

~~~
api
The latter is what I meant. I didn't mean don't sign contracts. I meant don't
do business with scum.

------
funkah
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.

~~~
fennecfoxen
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.

------
maeon3
Get people to work like hell having given them stock options... Then take it
away from all but the top 20% or face termination?

the manager who came up with that idea is no doubt getting a huge bonus.

------
shareme
Its called Mafia Wars for a reason..now we know the reason..capice

------
sabat
_With the unvested shares, the executives believed they could attract more top
talent with the promise of stock._

Not if the new hires find out about this previous action, and realize that the
company may very well demand the stock back.

------
beachgeek
This is unreal. If the employees weren't "adding as much value" why not just
fire them? California is an at-will employment state anyway.

------
samikc
it shows how greedy people can be. i cannot think of anything like this can be
done by a tech company. bunch of douche bag. how the hell are going to decide
what contribution is important or which one is not? This is pure greed man...
I am posting this in FB let Zynga games go to hell..

------
nickpinkston
Scumbag Zynga?

Make money pressuring users to pay for virtual goods. Pressure employees to
give stock for virtual jobs...

~~~
lbarrow
This isn't reddit.

~~~
nickpinkston
Yes, this is SPARTA!

No seriously, I was just making the point as a joke that we shouldn't be
surprised that a company like Zynga, who makes money through admittedly slimy
means, wouldn't have the same attitude towards everything else too. I think
the ScumBag meme is apt.

