1/12/2024 0 Comments Skype stock employees![]() ![]() However, as Reuters reported, a Bloomberg reporter discovered some Skype contracts also had an “incomprehensible” clawback provision, which gave the company had the right to repurchase their vested stock from employees - effectively cutting them out of profits from the sale. Questioned by reporters from TechCrunch and other places, Skype said the executives were fired by performance reasons and received most of their stock compensation. First, Skype – which was funded by the private equity firm Silver Lake Partners - fired several executives just before the $8.5 billion acquisition. Skype employees who had vested shares were looking forward to reaping a lucrative reward for all their hard work.īut for some employees, that never materialized. At the time, few Silicon Valley employees or financial reporters had ever heard of stock option clawbacks. That’s exactly what happened to some Skype employees when the company was bought by Microsoft in May 2011. “Since the real value of owning startup stock comes with an ‘exit’ event like an IPO or acquisition,” Russell explains, “this early buyback prevents the stockholder from realizing that growth or ‘pop’ in value.” But leaving or termination may trigger a clawback, in which the company forces you to sell back your discounted shares. If you are still at the company when it’s sold, you’ll receive the full value of your shares. ![]() In these cases, the contract may stipulate that the company can buy back the vested shares after a “triggering” event, such as you leaving the company or being terminated with or without cause. ![]() But for startups with clawback rights, individuals earn shares they don’t really own” free and clear. There are special rules and vesting and requirements for exercising options, but once the shares are earned and options exercised, these stockholders have true ownership rights. “In a true startup equity plan, executives and employees earn shares, which they continue to own when they leave the company. In startups, especially those backed by venture capital, “employees are expecting traditional ownership of their stock, which is that you can buy and hold shares until an event such as acquisition or IPO,” says Palo Alto, Calif.-based attorney Mary Russell, founder of Stock Option Counsel, P.C., which serves employees, executives and founders. ![]()
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