As I understand it from the WSJ article, Zynga signed a contract with some employees, giving them X number of RSUs. Later, before these RSUs vested, they threatened the employees with termination unless they gave back some of those RSUs. Coercing someone via threat into modifying a contract is, literally, a Darth Vader tactic ("I am altering the deal. Pray I don't alter it any further.")
I understand that, from Pincus' perspective (1) these employees didn't turn out to be as critical to the company as their initial grant might have suggested, and (2) the equity was needed for other purposes. However, that's the risk that Pincus took in signing these contracts in the first place. My understanding is that when you sign a contract with someone you are required to act in good faith to see that all parties receive the benefits agreed upon in the contract. Threatening to fire someone unless they give up a benefit is not acting in good faith.
But the reality is that this happens all the time, and people just fire the employee. He was trying to reconcile the "need" to fire the person for being compensated above their actual performance vs. wanting to simply renegotiate the compensation in light of their performance. And worth pointing out, every article highlights it only applied to UNVESTED stock... whatever they already vested was theirs.
My point is that it is nuanced. He was retroactive in the sense that he wanted to re-offer them their UNVESTED stock, but he never requested anything already vested. And there are lots of reasons why this would happen. Historically the choices have been "fire" or "suck it up" and he looked for a third. I just don't think it's as heinous as people have made it out to be.
It feels really insensitive and almost gordon gecko'esque, and maybe it was, I'm just pointing out there could be more considerate points of view that recognize the challenge of having an overpaid employee who isn't performing, but you don't quite want to fire. If you fire them, maybe they can't afford to exercise their options and are left with absolutely nothing. In that scenario, simply renegotiating unvested options and letting them continue to be employed so they aren't forced to exercise is SO MUCH BETTER for that employee.
As I understand it from the WSJ article, Zynga signed a contract with some employees, giving them X number of RSUs. Later, before these RSUs vested, they threatened the employees with termination unless they gave back some of those RSUs. Coercing someone via threat into modifying a contract is, literally, a Darth Vader tactic ("I am altering the deal. Pray I don't alter it any further.")
I understand that, from Pincus' perspective (1) these employees didn't turn out to be as critical to the company as their initial grant might have suggested, and (2) the equity was needed for other purposes. However, that's the risk that Pincus took in signing these contracts in the first place. My understanding is that when you sign a contract with someone you are required to act in good faith to see that all parties receive the benefits agreed upon in the contract. Threatening to fire someone unless they give up a benefit is not acting in good faith.