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The oddball thing here is not that people are being let go so that a startup can recapture their unvested stock (as you note, this happens all the time, for reasons both good and bad) but that a company would create what amounts to a "hit list" in order to systematically pressure employees to surrender shares on threat of being fired. The company-wide message to employees is, in effect, "we lured you to join us with promises of a high upside via this stock grant in case we succeeded but, now that this has come to pass, we think you are getting a windfall and want a good part of it back." Since employment is at will, this tactic can be effective in reducing the equity base and maximizing value for other shareholders in the company. But at what price? This effort is being driven by a CEO who is clearly dominant, holding almost 40% of the voting power in the company and using it, for example, to cause the company to buy back nearly $110M worth of his personal stock pre-IPO. The overall effect, then, is one of a leader who appears arbitrary and unfair to those who were there early on. While cashing in for himself, he is "clawing back" on others. It might be legal but it just plain looks bad and would hardly seem to be a good way to motivate people or to keep strong people in your company for the long term.



No one should be surprised that this is coming from Mark "I Did Every Horrible Thing In The Book Just To Get Revenues" Pincus.

It not just looks bad. It IS bad. Arbitrarily deciding who does and who does not deserve to vest is ridiculous. If the person is not performing, let them go. They are an at-will employee.

By negotiating them to keep their job by giving stock options back, they are simply trying to keep that employee at a cheaper rate. The employees must be performing effectively if they want to keep them. The notion that these people are doing nothing and still employed by Zynga is disingenuous.

The naivete (or CEO apologism) around here is astounding. I understand keeping an unbalanced and impassionate point of view but at some point if it sounds like a duck and looks like a duck it IS a duck.


I wonder if there is case for a lawsuit here especially if there is no across the board performance issue with all of these employees who are being asked to surrender stock.

I would argue that they were promised something that the company is failing to deliver and it is thus engaging in fraud, but I am not a lawyer thus I am unsure how to make this into an effective legal argument.


     > [...] maximizing value for other shareholders in the company. But at what price?
Unvested employees aren't shareholders, so "other shareholders" is disingenuous. You meant "all shareholders".




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