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I have to respectfully disagree with your logic. If you read the article, what is actually happening is they are retroactively trying to reduce restricted stock

by gergles 15y ago

I have to respectfully disagree with your logic. If you read the article, what is actually happening is they are retroactively trying to reduce restricted stock grants that were already made. So, if I say "come work for me for free, and in exchange I will give you 10,000 RSU that vest over 4 years", then 3 years down the line say "just kidding, you don't get these last 2,500, but you get to keep working here", that is absolutely trying to take back comp. They can certainly withhold future restricted stock grants, but trying to take back already granted shares, vested or not, is beyond the pale in my opinion.

jaekwon 15y ago
That's true, but the alternative that we're already familiar with is simply firing the employee, which is not any better. If we're OK with being fired, shouldn't we be OK with this?
staunch 15y ago
Look at it from his perspective. He knows what the IPO is going to value the company at now. He's looking at some low-performing employees and calculating that they're simply not worth keeping around if it means giving them $20 million (or whatever) in the IPO. If it's ethical to fire these people (in which case they lose all unvested shares) then it stands to reason it would be ethical to renegotiate a deal that both parties think is fair.
- jellicle 15y ago
  No. If he was looking at low-performing employees he would fire them. He's looking at some high-performing employees in a terrible labor market, and calculating that their BATNA is not very good, so he's deciding to find a way to screw them.
ghshephard 15y ago
They can't touch the shares that have vested - I think we both agree here. They could just fire the non-performing executive, and put an end to the vesting schedule. Here is the thing - Firing Non-Performing executives at startups with huge stock allocations happens ALL the time at _every_ company. It's not at all unusual - I've never been at a company where it hasn't happened. And frequently. It's absolutely business as usual. I don't understand why Pincus didn't just fire these people and move on. That's the weird part of this entire thread.
- staunch 15y ago
  Good point. I'm positive I'd just fire them. It sounds like he made a list of B/C players but wants to keep them around. Maybe he's concerned how it would look if he fired a group of execs right before the IPO?
  - deleted 15y ago
    [deleted]

by gergles 15y ago

jaekwon 15y ago

That's true, but the alternative that we're already familiar with is simply firing the employee, which is not any better. If we're OK with being fired, shouldn't we be OK with this?

staunch 15y ago

Look at it from his perspective. He knows what the IPO is going to value the company at now. He's looking at some low-performing employees and calculating that they're simply not worth keeping around if it means giving them $20 million (or whatever) in the IPO. If it's ethical to fire these people (in which case they lose all unvested shares) then it stands to reason it would be ethical to renegotiate a deal that both parties think is fair.

jellicle 15y ago
No. If he was looking at low-performing employees he would fire them. He's looking at some high-performing employees in a terrible labor market, and calculating that their BATNA is not very good, so he's deciding to find a way to screw them.

ghshephard 15y ago

They can't touch the shares that have vested - I think we both agree here. They could just fire the non-performing executive, and put an end to the vesting schedule. Here is the thing - Firing Non-Performing executives at startups with huge stock allocations happens ALL the time at _every_ company. It's not at all unusual - I've never been at a company where it hasn't happened. And frequently. It's absolutely business as usual. I don't understand why Pincus didn't just fire these people and move on. That's the weird part of this entire thread.

staunch 15y ago
Good point. I'm positive I'd just fire them. It sounds like he made a list of B/C players but wants to keep them around. Maybe he's concerned how it would look if he fired a group of execs right before the IPO?
- deleted 15y ago
  [deleted]