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Detail missing from this article (at least the article linked as I write this comment): Neil Dana was GoPro employee #1 and still works at the company. This det

by Pyxl101 11y ago

Detail missing from this article (at least the article linked as I write this comment): Neil Dana was GoPro employee #1 and still works at the company. This detail is seemingly absent from a bunch of news articles, and that fact really surprises me. It's like the news wants to make this sound more controversial than it really should be; they clearly want to play up the "college roommate" aspect and describe the move as "generous", rather than the "employee #1" aspect. Woodman and Dana reportedly had a contract that Dana would receive 10% on sales of Woodman's stock, as first employee and head of sales, and Woodman is honoring the contract. It's not just, as far as I can tell, some kind of donation or obscure college bet. Sure, the contract was verbal. I still don't think we should be /astonished/ that someone honors an employment contract that was made for equity. That's setting the bar rather low, isn't it?

joelrunyon 11y ago
> I still don't think we should be /astonished/ that someone honors an employment contract that was made for equity. That's setting the bar rather low, isn't it? Yes, that's the standard, but yet, everyone is still surprised. Highlighting these events in a public manner could help push the tide to make sure this isn't such a rare event.
rifung 11y ago
Well in fairness, with the way companies treat their employees nowadays, or at least appear to, the bar is very low. It would not surprise me at all if early employees get shafted when they dont have things down in writing. It doesn't even surprise me when employees get screwed even with things in writing. Its not like people have low expectations of companies for no reason.
venomsnake 11y ago
With the high profile clawbacks in the recent years it is indeed rare. I am sure that there were legal ways to pay him way less.
jib 11y ago
Well it is a good story, right? Like Wizards of the Coast's really expensive table: http://www.peteradkison.com/blog-entry-3-wizards-of-the-coast-equity-distributions-part-2/ http://www.peteradkison.com/blog-entry-3-wizards-of-the-coas...
davidslv 11y ago
I just read the article, I don't know much about the subject, but I find myself feeling really good about someone honouring the contract, even more a verbal one, I wish more people could honour theirs. I think the moral of this story is: honour your word.
keypusher 11y ago
There's probably quite a few people out there who would go back on a verbal agreement for $230 million.
- gutnor 11y ago
  230 million out of 2.3 billion. I hope the vast majority around here would honour their word: there is nothing at all you can do with 2.3 billion that you cannot do equally with 2 billion. 230 million out of 460, 100K out of 1 million that's would be another story.
  - deleted 11y ago
    [deleted]
  - deleted 11y ago
    [deleted]
  - avn2109 11y ago
    >> "there is nothing at all you can do with 2.3 billion that you cannot do equally with 2 billion." What about threshold effects in large scale philanthropy, where you could eradicate malaria in country X if only you could buy another three hundred million dollars worth of mosquito nets. But since you don't have the money, you only solve 95% of the problem, and then the mosquitos breed back to their original level in a few generations. (Contrived example but you get the idea)
- matwood 11y ago
  The person getting the 230M isn't just some random guy on the street that a bet was made with. It is employee #1 who still works there. Presumably he was/is key to the companies success and future. Personally, I would happy to give someone 10% of my companies worth and have it be 230M because that means I have built a 2.3B company.
  - gohrt 11y ago
    Not really true. Someone can do an incredible job taking a business from 0 to $1B, but be ineffective or worse at taking it from $1B->$2B. and that's OK --- you can thank and pay them for their past contribution, not in expectation of similar future service.
choppaface 11y ago
My experience is that the note at the end of the article-- that most issues like this one go to court or worse-- is the sad reality. I fought my company's general counsel for an entire quarter to get them to honor a verbal promise of a stock bonus. The bonus was decent (+20% of my original grant, though they had lowballed me originally) though essentially worthless (<$10k over 4 years) at the time. I was a junior-level individual contributor. After a quarter of fighting, the general counsel denied me by having the board change my grant without my signed approval. By then, it was basically too late to sue, the grant didn't have any value anyways, and I wouldn't have had much of a chance of vesting the grant (over 4 years) had I sued anyways (as the management had been historically liberal with firing people). I eventually got the majority of the value of the stock awarded after bringing to light the experience of another employee who had been treated with a similar gross lack of integrity. They didn't fire me, but they aggressively managed me out of the team (into a role where I had essentially zero chance of further bonuses). Oral stock contracts are tricky business. Sometimes a court will uphold them, sometimes not: * http://calcorporatelaw.com/2012/10/court-of-appeal-upholds-unsigned-stock-option-agreement/ http://calcorporatelaw.com/2012/10/court-of-appeal-upholds-u... * https://books.google.com/books?id=Db1uzraBVugC https://books.google.com/books?id=Db1uzraBVugC It's really, really appealing for companies to weasel out of unwritten contracts, especially if they feel there's little monetary risk and their legal team has reviewed what might be discovered in a potential case. While I agree we shouldn't set such a low bar, we've yet to engineer a solid mechanism to steer companies towards the better. The law expects businesses to keep good records. We shouldn't let them abuse the privilege of non-documentation.
rayiner 11y ago
An agreement, even if verbal, can be a contract if the other party gave consideration (here, labor). So the story is: executive meets terms of contract with employee #1.
- kolbe 11y ago
  > So the story is: executive meets terms of contract with employee #1 In all honesty, that would also be a story worth reading.
- gohrt 11y ago
  Oral contracts are completely binding in theory, but in practice a judge requires evidence of the contract's existence and content. What if CEO person "yes we had an agreement, but it was for 5%, not 10%?" How would a judge decide? At best, look for written documents about the contract, or testimony from people who the CEO told about the contract. Get it in writing.
kevando 11y ago
Well the fact this news comes out after he makes news for being the highest paid CEO, makes me think this is a PR move.
Lawtonfogle 11y ago
>Sure, the contract was verbal. I still don't think we should be /astonished/ that someone honors an employment contract that was made for equity. That's setting the bar rather low, isn't it? With how businesses will try to screw people (employers, customers, and unrelated third parties) over even with written contracts, honoring a verbal contract at least appears to be breaking the norm. Maybe it only appears so because the bad faith behavior is so over reported, but a short review of history has left me thinking that humans will sell their soul for enough money. Consider the violence companies have always deployed to protect their profits, be it historically in the US or be it currently in third world countries.
downandout 11y ago
> That's setting the bar rather low, isn't it? Based upon my own experience, I would say that a founder honoring a very expensive agreement, made before the company was highly successful, isn't a low bar at all. It's an exception to the rule; look at what Zynga did as an example [1]. They'll agree to whatever they have to in order to get people to work, and then use any money, power, and influence they wind up with as a result of that work to try to unravel those agreements should the company succeed. IMO this move makes Nick Woodman a decent guy in a sea of fairly greedy and unethical people (the kinds of people that seem to make it to billionaire status). [1] http://www.wsj.com/article_email/SB10001424052970204621904577018373223480802-lMyQjAxMTAxMDAwOTEwNDkyWj.html http://www.wsj.com/article_email/SB1000142405297020462190457...
- scarmig 11y ago
  It certainly makes the expected value of equity in new start-ups that Woodman does about ten times more valuable than what you see at most places.
bengali3 11y ago
>The terms of this promise were even disclosed in GoPro’s S-1 filing with the Securities and Exchange Commission as the company was gearing up to go public last year Agreed, seems like this is nothing out of the ordinary. 'GoPro CEO decides not to get sued for 229M by his employee #1' would be another way to put it. I would say that this was committed to 'in writing' at that time, if not before. Edit: From the S1 "Share of proceeds from sale of equity securities During our development stage, Nicholas Woodman, our CEO, entered into a verbal agreement with Neil Dana, an employee since October 2004, pursuant to which Mr. Woodman agreed to share 10% of any proceeds he received from the sale of our equity securities held by Mr. Woodman. Pursuant to Mr. Woodman’s agreement with Mr. Dana, in March 2011, we paid Mr. Dana a cash payment of $6.1 million, and Mr. Woodman reimbursed us in the amount of $6.1 million. We recorded the payment to Mr. Dana as compensation expense. In release of any claim Mr. Dana had to further payments under his agreement with Mr. Woodman, in June 2011 we issued Mr. Dana fully vested options to purchase 6,584,427 shares of Class B common stock under our 2010 Plan at an exercise price of $0.763 per share, and in December 2011 issued to him 270,000 RSUs under our 2010 Plan that will be settled upon a qualified acquisition. We recorded compensation expense of $6.8 million in connection with the issuance of these options. In connection with our equity awards to Mr. Dana, Mr. Woodman entered into a separate agreement with us in December 2011 pursuant to which he agreed to contribute back to us the same number of shares of Class B common stock as are issued pursuant to the exercise of Mr. Dana’s options. Mr. Dana has been employed by us since October 2004. During 2011, 2012 and 2013, Mr. Dana had total cash compensation, including base salary, bonus and other compensation, of $6.3 million (inclusive of the $6.1 million payment described above), $245,499 and $240,982, respectively." S1 link http://www.sec.gov/Archives/edgar/data/1500435/000119312514404584/d809891ds1.htm http://www.sec.gov/Archives/edgar/data/1500435/0001193125144...

by Pyxl101 11y ago

joelrunyon 11y ago

> I still don't think we should be /astonished/ that someone honors an employment contract that was made for equity. That's setting the bar rather low, isn't it? Yes, that's the standard, but yet, everyone is still surprised. Highlighting these events in a public manner could help push the tide to make sure this isn't such a rare event.

rifung 11y ago

Well in fairness, with the way companies treat their employees nowadays, or at least appear to, the bar is very low. It would not surprise me at all if early employees get shafted when they dont have things down in writing. It doesn't even surprise me when employees get screwed even with things in writing. Its not like people have low expectations of companies for no reason.

venomsnake 11y ago

With the high profile clawbacks in the recent years it is indeed rare. I am sure that there were legal ways to pay him way less.

jib 11y ago

Well it is a good story, right? Like Wizards of the Coast's really expensive table: http://www.peteradkison.com/blog-entry-3-wizards-of-the-coast-equity-distributions-part-2/ http://www.peteradkison.com/blog-entry-3-wizards-of-the-coas...

davidslv 11y ago

I just read the article, I don't know much about the subject, but I find myself feeling really good about someone honouring the contract, even more a verbal one, I wish more people could honour theirs. I think the moral of this story is: honour your word.

keypusher 11y ago

There's probably quite a few people out there who would go back on a verbal agreement for $230 million.

gutnor 11y ago
230 million out of 2.3 billion. I hope the vast majority around here would honour their word: there is nothing at all you can do with 2.3 billion that you cannot do equally with 2 billion. 230 million out of 460, 100K out of 1 million that's would be another story.
- deleted 11y ago
  [deleted]
- deleted 11y ago
  [deleted]
- avn2109 11y ago
  >> "there is nothing at all you can do with 2.3 billion that you cannot do equally with 2 billion." What about threshold effects in large scale philanthropy, where you could eradicate malaria in country X if only you could buy another three hundred million dollars worth of mosquito nets. But since you don't have the money, you only solve 95% of the problem, and then the mosquitos breed back to their original level in a few generations. (Contrived example but you get the idea)
matwood 11y ago
The person getting the 230M isn't just some random guy on the street that a bet was made with. It is employee #1 who still works there. Presumably he was/is key to the companies success and future. Personally, I would happy to give someone 10% of my companies worth and have it be 230M because that means I have built a 2.3B company.
- gohrt 11y ago
  Not really true. Someone can do an incredible job taking a business from 0 to $1B, but be ineffective or worse at taking it from $1B->$2B. and that's OK --- you can thank and pay them for their past contribution, not in expectation of similar future service.

choppaface 11y ago

My experience is that the note at the end of the article-- that most issues like this one go to court or worse-- is the sad reality. I fought my company's general counsel for an entire quarter to get them to honor a verbal promise of a stock bonus. The bonus was decent (+20% of my original grant, though they had lowballed me originally) though essentially worthless (<$10k over 4 years) at the time. I was a junior-level individual contributor. After a quarter of fighting, the general counsel denied me by having the board change my grant without my signed approval. By then, it was basically too late to sue, the grant didn't have any value anyways, and I wouldn't have had much of a chance of vesting the grant (over 4 years) had I sued anyways (as the management had been historically liberal with firing people). I eventually got the majority of the value of the stock awarded after bringing to light the experience of another employee who had been treated with a similar gross lack of integrity. They didn't fire me, but they aggressively managed me out of the team (into a role where I had essentially zero chance of further bonuses). Oral stock contracts are tricky business. Sometimes a court will uphold them, sometimes not: * http://calcorporatelaw.com/2012/10/court-of-appeal-upholds-unsigned-stock-option-agreement/ http://calcorporatelaw.com/2012/10/court-of-appeal-upholds-u... * https://books.google.com/books?id=Db1uzraBVugC https://books.google.com/books?id=Db1uzraBVugC It's really, really appealing for companies to weasel out of unwritten contracts, especially if they feel there's little monetary risk and their legal team has reviewed what might be discovered in a potential case. While I agree we shouldn't set such a low bar, we've yet to engineer a solid mechanism to steer companies towards the better. The law expects businesses to keep good records. We shouldn't let them abuse the privilege of non-documentation.

rayiner 11y ago

An agreement, even if verbal, can be a contract if the other party gave consideration (here, labor). So the story is: executive meets terms of contract with employee #1.

kolbe 11y ago
> So the story is: executive meets terms of contract with employee #1 In all honesty, that would also be a story worth reading.
gohrt 11y ago
Oral contracts are completely binding in theory, but in practice a judge requires evidence of the contract's existence and content. What if CEO person "yes we had an agreement, but it was for 5%, not 10%?" How would a judge decide? At best, look for written documents about the contract, or testimony from people who the CEO told about the contract. Get it in writing.

kevando 11y ago

Well the fact this news comes out after he makes news for being the highest paid CEO, makes me think this is a PR move.

Lawtonfogle 11y ago

>Sure, the contract was verbal. I still don't think we should be /astonished/ that someone honors an employment contract that was made for equity. That's setting the bar rather low, isn't it? With how businesses will try to screw people (employers, customers, and unrelated third parties) over even with written contracts, honoring a verbal contract at least appears to be breaking the norm. Maybe it only appears so because the bad faith behavior is so over reported, but a short review of history has left me thinking that humans will sell their soul for enough money. Consider the violence companies have always deployed to protect their profits, be it historically in the US or be it currently in third world countries.

downandout 11y ago

> That's setting the bar rather low, isn't it? Based upon my own experience, I would say that a founder honoring a very expensive agreement, made before the company was highly successful, isn't a low bar at all. It's an exception to the rule; look at what Zynga did as an example [1]. They'll agree to whatever they have to in order to get people to work, and then use any money, power, and influence they wind up with as a result of that work to try to unravel those agreements should the company succeed. IMO this move makes Nick Woodman a decent guy in a sea of fairly greedy and unethical people (the kinds of people that seem to make it to billionaire status). [1] http://www.wsj.com/article_email/SB10001424052970204621904577018373223480802-lMyQjAxMTAxMDAwOTEwNDkyWj.html http://www.wsj.com/article_email/SB1000142405297020462190457...

scarmig 11y ago
It certainly makes the expected value of equity in new start-ups that Woodman does about ten times more valuable than what you see at most places.

bengali3 11y ago

>The terms of this promise were even disclosed in GoPro’s S-1 filing with the Securities and Exchange Commission as the company was gearing up to go public last year Agreed, seems like this is nothing out of the ordinary. 'GoPro CEO decides not to get sued for 229M by his employee #1' would be another way to put it. I would say that this was committed to 'in writing' at that time, if not before. Edit: From the S1 "Share of proceeds from sale of equity securities During our development stage, Nicholas Woodman, our CEO, entered into a verbal agreement with Neil Dana, an employee since October 2004, pursuant to which Mr. Woodman agreed to share 10% of any proceeds he received from the sale of our equity securities held by Mr. Woodman. Pursuant to Mr. Woodman’s agreement with Mr. Dana, in March 2011, we paid Mr. Dana a cash payment of $6.1 million, and Mr. Woodman reimbursed us in the amount of $6.1 million. We recorded the payment to Mr. Dana as compensation expense. In release of any claim Mr. Dana had to further payments under his agreement with Mr. Woodman, in June 2011 we issued Mr. Dana fully vested options to purchase 6,584,427 shares of Class B common stock under our 2010 Plan at an exercise price of $0.763 per share, and in December 2011 issued to him 270,000 RSUs under our 2010 Plan that will be settled upon a qualified acquisition. We recorded compensation expense of $6.8 million in connection with the issuance of these options. In connection with our equity awards to Mr. Dana, Mr. Woodman entered into a separate agreement with us in December 2011 pursuant to which he agreed to contribute back to us the same number of shares of Class B common stock as are issued pursuant to the exercise of Mr. Dana’s options. Mr. Dana has been employed by us since October 2004. During 2011, 2012 and 2013, Mr. Dana had total cash compensation, including base salary, bonus and other compensation, of $6.3 million (inclusive of the $6.1 million payment described above), $245,499 and $240,982, respectively." S1 link http://www.sec.gov/Archives/edgar/data/1500435/000119312514404584/d809891ds1.htm http://www.sec.gov/Archives/edgar/data/1500435/0001193125144...