In Zynga case there's no material difference between
* asking an employee to give up a certain number of options
* firing the employee, making further option vesting impossible
By not firing immediately and by not requesting 100% of options be cancelled out, Zynga was actually playing nice. If you were among people affected by that offer, the writing as far as future career prospects at Zynga was on the wall.
Firing people to weasel out of paying their unvested options is definitely shady. When those employees were hired, did they tell them "Oh, by the way, if your unvested options wind up being worth a lot more than your fair salary, we're going to threaten to fire you to avoid paying."?
If someone had $1M in unvested options, and you ask them to renegotiate for $200k and keep them there as an employee, that's really tone deaf. Do you really think that employee is going to give their best efforts after you just cheated them out of $800k?
Yeah, no doubt somewhere along the way someone made a negotiation mistake, and is now trying to remedy that, which does not paint them as a man of their word.
From strictly rational perspective, choosing between two messages - "you're costing the company too much, therefore we're reducing your package" and "you're costing the company too much, you're fired, Jonathan will walk you from the building" - is a no-brainer for employees.
> Yeah, no doubt somewhere along the way someone made a negotiation mistake
Is it really a negotiation mistake, rather than a result of growing valuation?
The point of stock options is to grant and receive them early at a low price. There's a good chance that they won't amount to much, but there's also a hope that they will be worth a lot. That's the entire point of accepting stock options over salary as an early employee.
But if stock options are likely to be cancelled if they appreciate in value, then their expected value quickly falls to zero, and it would make more sense to just offer yearly cash bonuses instead.
Yeah. If the options were worth $100k when the person was hired, and now they're worth $10M, is that really a negotiation mistake? Maybe the employee did a great job and that's the reason they are now worth $10M? Would the employee have taken the job if you only offered $1k equity (or been insulted by the pittance)?
By their actions, Zygna also signaled to the other employees that Zynga was going play a "heads we win, tail you lose" in the future. Who in their right mind would ever work for that founder again?
Going in, a startup employee gets some stock (upside) in exchange for risk (downside). Zygna used their relative power to reneged on that agreement to capture the employee's upside. "You can give us your money or we can take it AND fire you. Hey, but its your choice."
* asking an employee to give up a certain number of options
* firing the employee, making further option vesting impossible
By not firing immediately and by not requesting 100% of options be cancelled out, Zynga was actually playing nice. If you were among people affected by that offer, the writing as far as future career prospects at Zynga was on the wall.