3 ms·

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.

by 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.

by 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.