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You're forgetting that when employees took their compensation packages, it was based on factoring in some probability of hitting a mega upside. By capping that

You're forgetting that when employees took their compensation packages, it was based on factoring in some probability of hitting a mega upside. By capping that upside, any vesting option package is worth less in expectation, so employees would have demanded higher base salaries knowing that they wouldn't fully participate in a huge win.

lpolovets 15y ago
The employees already have a huge win... the article talks about employees being worth $200 million once they are fully vested. If they're halfway to vesting, they might be worth $100 million, and it seems like Zynga is saying that it's not worth $100 more million to keep the employee for two more years. It's a weird problem that I think is only there because Zynga grew so freaking fast. Normally an early employee's 4 years are up way before a company is worth billions of dollars. Even in the last year or two of a 4-year option plan, the employer's implicit choice is "is it worth another .1% for me to keep this person for one more year?", and .1% might be worth 20k or even 50k, and so the employer doesn't even consider ways of reducing that cost because it's tiny compared to the early employee's value. But when the cost is $10m or $25m or $50m a year, it's definitely something to think about. And only the hyper-grown companies that popped up recently (Twitter, Zynga, Groupon) have had to face this problem.
- rhizome 15y ago
  it seems like Zynga is saying that it's not worth $100 more million to keep the employee for two more years. It's not Zynga's money. Zynga wants it to be, but it isn't.
  - Bud 15y ago
    Slight correction in wording: "Zynga" doesn't really want it to be. The 2-5 or so guys at the very top of Zynga want it to be, because they think Zynga should create a few more billionaires, instead of several dozen more millionaires. To wit, they think THEY should be made into billionaires rather than paying the folks who created the value of the company. Hard to be shocked by this, since this has been the direction American business has been traveling in for a few decades now, but usually the PR side of it is handled better.
    - rhizome 15y ago
      Maybe it's how he enjoys so much support in the business community: he's the canary in the coalmine who sacrifices his image to provide cover for other companies in the future to claw back and/or establish variable equity commitments. To us he's a useful idiot, to C-levels he's a valuable mercenary.
    - rhizome 15y ago
      Zynga principals == Zynga

lpolovets 15y ago

The employees already have a huge win... the article talks about employees being worth $200 million once they are fully vested. If they're halfway to vesting, they might be worth $100 million, and it seems like Zynga is saying that it's not worth $100 more million to keep the employee for two more years. It's a weird problem that I think is only there because Zynga grew so freaking fast. Normally an early employee's 4 years are up way before a company is worth billions of dollars. Even in the last year or two of a 4-year option plan, the employer's implicit choice is "is it worth another .1% for me to keep this person for one more year?", and .1% might be worth 20k or even 50k, and so the employer doesn't even consider ways of reducing that cost because it's tiny compared to the early employee's value. But when the cost is $10m or $25m or $50m a year, it's definitely something to think about. And only the hyper-grown companies that popped up recently (Twitter, Zynga, Groupon) have had to face this problem.

rhizome 15y ago
it seems like Zynga is saying that it's not worth $100 more million to keep the employee for two more years. It's not Zynga's money. Zynga wants it to be, but it isn't.
- Bud 15y ago
  Slight correction in wording: "Zynga" doesn't really want it to be. The 2-5 or so guys at the very top of Zynga want it to be, because they think Zynga should create a few more billionaires, instead of several dozen more millionaires. To wit, they think THEY should be made into billionaires rather than paying the folks who created the value of the company. Hard to be shocked by this, since this has been the direction American business has been traveling in for a few decades now, but usually the PR side of it is handled better.
  - rhizome 15y ago
    Maybe it's how he enjoys so much support in the business community: he's the canary in the coalmine who sacrifices his image to provide cover for other companies in the future to claw back and/or establish variable equity commitments. To us he's a useful idiot, to C-levels he's a valuable mercenary.
  - rhizome 15y ago
    Zynga principals == Zynga