5 ms·

I am saying it shouldn't be a legal issue. It is the equivalent of saying 'you need to take a cut in pay or you will be laid off'.

_delirium 15y ago
If we're talking about what should be illegal, I find it hard to argue that it shouldn't be. If you hire someone on the promise that they'll get a bonus at 5 years, and purposely fire them at 4 years, 11 months solely to avoid paying them the bonus, that should be illegal. In any reasonable interpretation of the contract, that isn't good-faith upholding of the contract--- you promised them something at certain milestones, and then purposely acted in a manner intended for the sole purpose of sabotaging the milestones, which is acting in bad faith. In most other kinds of contingent pay that's tortious: if you promise a building contractor contingency bonuses upon meeting certain deadlines, and then you purposely interfere to make them miss the deadlines so you can get the work cheaper (and admit doing so!), you're probably acting illegally. Heck, even basketball players have sued over instances where a team kept them out of a few games solely to cause them to miss performance targets.
- ericd 15y ago
  I disagree, what you describe is shady, but also pretty unrealistic. Normally there's a vesting schedule with only a 1 year cliff, and then chunks vest yearly. That's essentially pro-rata.
  - rdl 15y ago
    The standard is to have a 1 year cliff (i.e. 25% of equity vest at 1 year), and then monthly vesting of the remainder (1/36 per month for the next 36 months). NOT yearly vesting after the first year. The exception is M&A earn out or vesting for key hires, which is often yearly, and sometimes even crazier; 1/2/3/4 where it's 10% the first year, 20% the second, 30% the third, and 40% the fourth.
    - ericd 15y ago
      Oops, sorry, yeah, you're right - it is normally monthly. That latter vesting is pretty crazy - with each year, each point is usually getting nonlinearly more valuable as well.
  - kls 15y ago
    what you describe is shady Not only is it shady it is a legal term and that term is called bad faith, if you can prove the party acted in bad faith, which if what is being reported about, return it or get fired, then that one is pretty locked up, then they are in violation of the spirit of contract. Faith is one of the foundations of contract law. If you are found to have not honored the faith portion of the contract then more times than not, you will be on the loosing end of a contract dispute.
    - ericd 15y ago
      I'm aware of bad faith. I think the fact that it continuously vests after a cliff, that it's clear in basically every options grant that you don't receive unvested options upon termination, and because employment contracts repeatedly emphasize that employment is completely at-will makes it pretty clear that you shouldn't count your unvested option chickens before they hatch, and hard to prove that you could reasonably expect to vest all options. The employees that have been there for multiple years will have already vested a big percentage of their stock regardless of what happens. I think Zynga is repulsive, and will hopefully get punished hard on many fronts for this, but I'm not convinced that what they're doing is strictly illegal. I'm convinced they'll get sued, though.
  - danssig 15y ago
    No it isn't. A big corp I worked at in the US had a 1/7th per year vesting period. Then the dot com bubble came and they gave everyone 4-year cliff options. That is, no vesting until after 4 years. They absolutely could have fired people 3 years and 11 months in (and almost certainly did).
    - ericd 15y ago
      Sorry, I was talking about the typical valley vesting schedule, I'm sure they run the gamut in the wider corporate world.

_delirium 15y ago

If we're talking about what should be illegal, I find it hard to argue that it shouldn't be. If you hire someone on the promise that they'll get a bonus at 5 years, and purposely fire them at 4 years, 11 months solely to avoid paying them the bonus, that should be illegal. In any reasonable interpretation of the contract, that isn't good-faith upholding of the contract--- you promised them something at certain milestones, and then purposely acted in a manner intended for the sole purpose of sabotaging the milestones, which is acting in bad faith. In most other kinds of contingent pay that's tortious: if you promise a building contractor contingency bonuses upon meeting certain deadlines, and then you purposely interfere to make them miss the deadlines so you can get the work cheaper (and admit doing so!), you're probably acting illegally. Heck, even basketball players have sued over instances where a team kept them out of a few games solely to cause them to miss performance targets.

ericd 15y ago
I disagree, what you describe is shady, but also pretty unrealistic. Normally there's a vesting schedule with only a 1 year cliff, and then chunks vest yearly. That's essentially pro-rata.
- rdl 15y ago
  The standard is to have a 1 year cliff (i.e. 25% of equity vest at 1 year), and then monthly vesting of the remainder (1/36 per month for the next 36 months). NOT yearly vesting after the first year. The exception is M&A earn out or vesting for key hires, which is often yearly, and sometimes even crazier; 1/2/3/4 where it's 10% the first year, 20% the second, 30% the third, and 40% the fourth.
  - ericd 15y ago
    Oops, sorry, yeah, you're right - it is normally monthly. That latter vesting is pretty crazy - with each year, each point is usually getting nonlinearly more valuable as well.
- kls 15y ago
  what you describe is shady Not only is it shady it is a legal term and that term is called bad faith, if you can prove the party acted in bad faith, which if what is being reported about, return it or get fired, then that one is pretty locked up, then they are in violation of the spirit of contract. Faith is one of the foundations of contract law. If you are found to have not honored the faith portion of the contract then more times than not, you will be on the loosing end of a contract dispute.
  - ericd 15y ago
    I'm aware of bad faith. I think the fact that it continuously vests after a cliff, that it's clear in basically every options grant that you don't receive unvested options upon termination, and because employment contracts repeatedly emphasize that employment is completely at-will makes it pretty clear that you shouldn't count your unvested option chickens before they hatch, and hard to prove that you could reasonably expect to vest all options. The employees that have been there for multiple years will have already vested a big percentage of their stock regardless of what happens. I think Zynga is repulsive, and will hopefully get punished hard on many fronts for this, but I'm not convinced that what they're doing is strictly illegal. I'm convinced they'll get sued, though.
- danssig 15y ago
  No it isn't. A big corp I worked at in the US had a 1/7th per year vesting period. Then the dot com bubble came and they gave everyone 4-year cliff options. That is, no vesting until after 4 years. They absolutely could have fired people 3 years and 11 months in (and almost certainly did).
  - ericd 15y ago
    Sorry, I was talking about the typical valley vesting schedule, I'm sure they run the gamut in the wider corporate world.