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That's kind of the point of shares, isn't it? They're super manipulatable and for just this reason: you can get rid of people you don't like. They can fight in

That's kind of the point of shares, isn't it? They're super manipulatable and for just this reason: you can get rid of people you don't like. They can fight in court all they want, but a private company will probably win.

nostrademons 10y ago
FWIW, this reminds me a lot of the Facebook/Saverin case. Saverin eventually won back many of his shares; enough that he's worth about $7B now. (And then renounced his American citizenship to avoid paying taxes on it, go figure.) It's a little different in that there may have been misrepresentations about Zenefits' fiscal health to the investors and actual illegal wrongdoing, while in Saverin's case, Facebook just felt that they could do better.
- muzz 10y ago
  Didn't Eduardo sell his shares in the ~$20 (or even high teens) range?
  - nostrademons 10y ago
    Wikipedia says he still holds on to about 50M of them.
    - muzz 10y ago
      That's how many shares he had at the time of the IPO. They underlying source is correct for its time (2012), but whoever wrote the Wikipedia is misrepresenting it as being from 2015.
SilasX 10y ago
Wait, what? I though the whole point of shares (per GP) is they're all (within the same class) treated equally, regardless of holder, specifically to prevent these kinds of shenanigans! Imagine if the management of a company voted to void some arbitrary 10% of the shares -- the ones held by people they didn't like, merely to claim more of the company for themselves. That would absolutely not be kosher. But then (assuming the grandparent's description of what happened is accurate), Zenefits is doing exactly the same thing by more roundabout means. Surely the laws on this aren't so easily circumvented? And even if not, isn't this as a big red flag to future investors?
- JonFish85 10y ago
  That's one way of looking at it, of course. I think another is to say that the concept of stock as compensation (especially in a private company) is to give the company maximum flexibility. They (presumably) don't have cash, so they give stock as a proxy for that. However, if they hit hard times, they can issue as many new shares as the BoD will allow to any new investors they want. This includes new classes of shares. It's not "standard" practice, but it's also not uncommon--to get rid of people they want to get rid of, they can dilute them out (issuing new shares and everyone except X gets new shares), issue new classes of shares with preference, etc. I'm sure there are laws around this, but it's also a private company so it can be tricky there. Stock in a private company is much more difficult to hold, since there are many, many ways for the company to manipulate it to the company's advantage.

nostrademons 10y ago

FWIW, this reminds me a lot of the Facebook/Saverin case. Saverin eventually won back many of his shares; enough that he's worth about $7B now. (And then renounced his American citizenship to avoid paying taxes on it, go figure.) It's a little different in that there may have been misrepresentations about Zenefits' fiscal health to the investors and actual illegal wrongdoing, while in Saverin's case, Facebook just felt that they could do better.

muzz 10y ago
Didn't Eduardo sell his shares in the ~$20 (or even high teens) range?
- nostrademons 10y ago
  Wikipedia says he still holds on to about 50M of them.
  - muzz 10y ago
    That's how many shares he had at the time of the IPO. They underlying source is correct for its time (2012), but whoever wrote the Wikipedia is misrepresenting it as being from 2015.

SilasX 10y ago

Wait, what? I though the whole point of shares (per GP) is they're all (within the same class) treated equally, regardless of holder, specifically to prevent these kinds of shenanigans! Imagine if the management of a company voted to void some arbitrary 10% of the shares -- the ones held by people they didn't like, merely to claim more of the company for themselves. That would absolutely not be kosher. But then (assuming the grandparent's description of what happened is accurate), Zenefits is doing exactly the same thing by more roundabout means. Surely the laws on this aren't so easily circumvented? And even if not, isn't this as a big red flag to future investors?

JonFish85 10y ago
That's one way of looking at it, of course. I think another is to say that the concept of stock as compensation (especially in a private company) is to give the company maximum flexibility. They (presumably) don't have cash, so they give stock as a proxy for that. However, if they hit hard times, they can issue as many new shares as the BoD will allow to any new investors they want. This includes new classes of shares. It's not "standard" practice, but it's also not uncommon--to get rid of people they want to get rid of, they can dilute them out (issuing new shares and everyone except X gets new shares), issue new classes of shares with preference, etc. I'm sure there are laws around this, but it's also a private company so it can be tricky there. Stock in a private company is much more difficult to hold, since there are many, many ways for the company to manipulate it to the company's advantage.