4 ms·

Zynga clawed back shares from underperforming founding executives, not rank-and-file employees, right? Not that you were, but that episode always seems to be p

Zynga clawed back shares from underperforming founding executives, not rank-and-file employees, right? Not that you were, but that episode always seems to be painted as though Pincus were yanking options away from sub-$100k/yr employees in the trenches. disclaimer: I'm not defending Zynga in general, nor am I trying to take the shine off of Pinterest's policy.

ekanes 12y ago
Sure, but if an executive is under-performing, you fire them. You don't go back and change their deal.
skunkworks 12y ago
Correct. Their lesson was that you shouldn't claw back equity from underperforming executives, you should just let them go.
- fsk 12y ago
  How do you know they were underperforming? Maybe the board just realized they could get a lot of extra money by looking for an excuse to get rid of them?
  - skunkworks 12y ago
    Your speculative conspiracy theory is plausible, but I work with one of the people who made this decision.
fsk 12y ago
I think they clawed back unvested options from many employees, who had unvested options with substantial value. That breaks the implied social contract of a startup. If the company is wildly successful, they'll try to claw back your unvested options, which makes startup equity even less attractive than it would otherwise be. Zygna isn't the only one that did this. Didn't Facebook also do this? (So in a startup, you can be screwed with options in three ways. If the startup fails, your equity is worth zero. If there's a low-value buyout, the common shareholders can get nothing. If the startup is wildly successful, the company will claw back your unvested options. Why join a startup for equity if you're going to get cheated when you hit the 100x home run?) Zygna got what they deserved. With changes to the way Facebook promotes their feeds and the switch to mobile, they lost most of their market. http://blog.sfgate.com/techchron/2013/06/04/why-zynga-is-failing-in-basic-napkin-math/ http://blog.sfgate.com/techchron/2013/06/04/why-zynga-is-fai...
- rmc 12y ago
  This is the problem with the US's "at will" employment. It affects white collar tech employees too. If you could only be fired for stated misbehaviour (like in the EU), this wouldn't have been possible.
  - eru 12y ago
    But that's why they don't hire in Europe.
    - kbart 12y ago
      Who "they"? As far as I'm aware, all mentioned companies have EU offices too.
      - eru 12y ago
        I mean, companies in Europe hire less. If you can't fire people easily, you think thrice about anyone you hire.
- foobarqux 12y ago
  It was Skype, not Facebook.
jacquesm 12y ago
Define 'underperforming'. That's about as subjective as it gets.
deleted 12y ago
[deleted]
walshemj 12y ago
"An injury to one is an injury to all" and if you can do this to board members who will have the wealth to fight this - what would they do to the rank and file.

ekanes 12y ago

Sure, but if an executive is under-performing, you fire them. You don't go back and change their deal.

skunkworks 12y ago

Correct. Their lesson was that you shouldn't claw back equity from underperforming executives, you should just let them go.

fsk 12y ago
How do you know they were underperforming? Maybe the board just realized they could get a lot of extra money by looking for an excuse to get rid of them?
- skunkworks 12y ago
  Your speculative conspiracy theory is plausible, but I work with one of the people who made this decision.

fsk 12y ago

I think they clawed back unvested options from many employees, who had unvested options with substantial value. That breaks the implied social contract of a startup. If the company is wildly successful, they'll try to claw back your unvested options, which makes startup equity even less attractive than it would otherwise be. Zygna isn't the only one that did this. Didn't Facebook also do this? (So in a startup, you can be screwed with options in three ways. If the startup fails, your equity is worth zero. If there's a low-value buyout, the common shareholders can get nothing. If the startup is wildly successful, the company will claw back your unvested options. Why join a startup for equity if you're going to get cheated when you hit the 100x home run?) Zygna got what they deserved. With changes to the way Facebook promotes their feeds and the switch to mobile, they lost most of their market. http://blog.sfgate.com/techchron/2013/06/04/why-zynga-is-failing-in-basic-napkin-math/ http://blog.sfgate.com/techchron/2013/06/04/why-zynga-is-fai...

rmc 12y ago
This is the problem with the US's "at will" employment. It affects white collar tech employees too. If you could only be fired for stated misbehaviour (like in the EU), this wouldn't have been possible.
- eru 12y ago
  But that's why they don't hire in Europe.
  - kbart 12y ago
    Who "they"? As far as I'm aware, all mentioned companies have EU offices too.
    - eru 12y ago
      I mean, companies in Europe hire less. If you can't fire people easily, you think thrice about anyone you hire.
foobarqux 12y ago
It was Skype, not Facebook.

jacquesm 12y ago

Define 'underperforming'. That's about as subjective as it gets.

deleted 12y ago

[deleted]

walshemj 12y ago

"An injury to one is an injury to all" and if you can do this to board members who will have the wealth to fight this - what would they do to the rank and file.