> The layoffs at Twitter would take place before a Nov. 1 date when employees were scheduled to receive stock grants as part of their compensation. Such grants typically represent a significant portion of employees’ pay. By laying off workers before that date, Mr. Musk may avoid paying the grants.
Classy. Have the employees not earned the stock? If he follows through, expect lawsuits to follow Mussk's action.
IANAL, but my understanding is that these contracts are usually stated in such a way that what Mr. Musk is doing is not a breach of contract. If he was literally withholding wages then of course that would be illegal. But if the contract simply says something like "All persons who are employed by Twitter as of Nov. 1, 2022 are entitled to a stock grant" then firing people on Oct 31 is a completely legal way to avoid giving the stock grant. It may be a dick move but that is a separate question from whether it is legal.
Yeah it just makes you an asshole. It's not illegal.
There was a pretty active Ask HN a couple weeks ago about a very low quality employee in line for a vesting cliff. I think 0 people fessed up to "let them drop." Almost everyone said the only moral thing to do & the only thing that wouldnt make the rest of the company hate & distrust you (and not believe their success was tied to the success of the org) was to offer a pretty generous buy out ahead of time, at basically the current value.
Have you never seen startups that fire people right before their first vesting period cliff and therefore get them employed at a discount?
I've seen a number of those. In one case, the CEO fired the CTO right before the one-year cliff in order to get more equity, then invited them back on in an advisory role for 1/10th of the equity compensation. (they did not accept)
> This is an amateurish and exceptionally stupid strategy, and a poor way to conduct business.
I've never seen it come around to bite those who do it though. The problem is one of power - the people affected typically are those earlier in their careers with less opportunity to say "no" to what looks like good employment, only to have part of their pay calculation ripped out with no warning.
In the case of the CEO/CTO, it was even worse as the company was in talks for acquisition and the firing for equity ended up netting the CEO an additional six figures within a few months. And they certainly seem to be doing fine.
There is nothing surprising about this. In the eyes of VC or the acquirer the idea of someone having "earned the stock" means nothing without a contract that says they've earned it. People need to stop gaslighting themselves into thinking that the company they work for or the company acquiring the company they work for will "do right by them". Capital doesn't care about you, your mortgage, your dreams, or anything else. Stop pretending it does.
This. The second the company or the persons running the company make more money by burning the bridge with you, they will do so without hesitation.
I know some people who worked for a company which got acquired a while back. The CEO walked away with over $11 million. Every single other employee's stock was worthless (common vs preferred). He could have paid them all out 5 figures and still had millions left over for himself.
Sometimes this does happen - VCs and acquirers behaving badly.
It has been my experience that in the vast majority of the cases, the VCs and the acquirers behave honorably, and do the right thing.
This is due to several factors:
1. They are ethical and/or more concerned about their reputation, esp. for future transactions.
2. The decision makers do not personally gain from such poor behavior (the $ flow to the organization, not to them).
3. The decision makers on the acquiring side are concerned about making enemies with others from the acquired companies.
By laying off workers before that date, Mr. Musk may avoid paying the grants.
Classy.
You know what's classy? Including the entire sentence from the article, instead of cutting it off to support your point.
Here's the actual sentence from the article:
"By laying off workers before that date, Mr. Musk may avoid paying the grants, though he is supposed to pay the employees cash in place of their stock under the terms of the merger agreement."
A half-truth is still a lie.
That said, this is the part I find disturbing:
Ross Gerber, the chief executive of Gerber Kawasaki Wealth and Investment Management, said he was told by Jared Birchall, the head of Mr. Musk’s family office, that layoffs were coming at Twitter. “I was told to expect somewhere around 50 percent of people will be laid off,” he said.
Dang, I wonder if this guy lost his job, he'd be just as rude to himself as he is to all the laid off Twitter employees. Because that's kinda the energy of this comment
So there's a spectrum, right? Parag the CEO is probably at one end. Fired, walks with ~$50m. Do you feel bad for him? Is it rude to say "He'll be fine."? No.
Ok now maybe at the other end we've got someone in the rust belt working at a steel mill. No other options. Private equity buys the mill and cans everyone. We both feel bad for that person. Full stop.
I just mean that the average employee of Twitter is way closer to Parag than to the steel mill worker. They're in the Bay. They cashed out at $54.20. There are other places to work. They are educated, connected, and have options. They will also likely get a severance. I think it'd be rude to 90% of the American workforce who struggles every day to not recognize the privilege of the people who will be fired from Twitter by Elon Musk.
> Saturday Night News: Musk fired the company’s entire senior staff “for cause,” an attempt to avoid paying out tens of millions of dollars in severance packages to the former CEO, CFO, GC and head of legal
Mr. Musk may also be testing Twitter’s engineers. He and his team have assigned some of them projects to complete, three people with knowledge of the matter said. One project involved changes to Twitter’s login screen, they said. Some engineers worked late into the night on Friday to complete the assignments, they said.
27 comments
[ 4.3 ms ] story [ 63.3 ms ] threadhttps://web.archive.org/web/20221029211749/https://www.nytim...
> The layoffs at Twitter would take place before a Nov. 1 date when employees were scheduled to receive stock grants as part of their compensation. Such grants typically represent a significant portion of employees’ pay. By laying off workers before that date, Mr. Musk may avoid paying the grants.
Classy. Have the employees not earned the stock? If he follows through, expect lawsuits to follow Mussk's action.
There was a pretty active Ask HN a couple weeks ago about a very low quality employee in line for a vesting cliff. I think 0 people fessed up to "let them drop." Almost everyone said the only moral thing to do & the only thing that wouldnt make the rest of the company hate & distrust you (and not believe their success was tied to the success of the org) was to offer a pretty generous buy out ahead of time, at basically the current value.
Ask HN: Firing an employee under a month before vest?
https://news.ycombinator.com/item?id=33186789.
(135 points, 295 comments)
I've seen a number of those. In one case, the CEO fired the CTO right before the one-year cliff in order to get more equity, then invited them back on in an advisory role for 1/10th of the equity compensation. (they did not accept)
This is an amateurish and exceptionally stupid strategy, and a poor way to conduct business. It amounts to acting in bad faith, "Gotcha, hahaha!"
What goes around comes around. Reputation and trust are valuable, if not everything. They're easy to break and difficult to regain.
All to save a few bucks, when he is the world's richest person? Seems just a tad greedy to rip-off / shortchange the proles.
I've never seen it come around to bite those who do it though. The problem is one of power - the people affected typically are those earlier in their careers with less opportunity to say "no" to what looks like good employment, only to have part of their pay calculation ripped out with no warning.
In the case of the CEO/CTO, it was even worse as the company was in talks for acquisition and the firing for equity ended up netting the CEO an additional six figures within a few months. And they certainly seem to be doing fine.
I know some people who worked for a company which got acquired a while back. The CEO walked away with over $11 million. Every single other employee's stock was worthless (common vs preferred). He could have paid them all out 5 figures and still had millions left over for himself.
When you find a solid leader who isn't a sellout, I suggest sticking with them. They are an anomaly.
It has been my experience that in the vast majority of the cases, the VCs and the acquirers behave honorably, and do the right thing.
This is due to several factors: 1. They are ethical and/or more concerned about their reputation, esp. for future transactions. 2. The decision makers do not personally gain from such poor behavior (the $ flow to the organization, not to them). 3. The decision makers on the acquiring side are concerned about making enemies with others from the acquired companies.
You know what's classy? Including the entire sentence from the article, instead of cutting it off to support your point.
Here's the actual sentence from the article:
"By laying off workers before that date, Mr. Musk may avoid paying the grants, though he is supposed to pay the employees cash in place of their stock under the terms of the merger agreement."
A half-truth is still a lie.
That said, this is the part I find disturbing:
Ross Gerber, the chief executive of Gerber Kawasaki Wealth and Investment Management, said he was told by Jared Birchall, the head of Mr. Musk’s family office, that layoffs were coming at Twitter. “I was told to expect somewhere around 50 percent of people will be laid off,” he said.
Yeah, no thank you.
Always a good grounding question44r4 to ask oneself.
So there's a spectrum, right? Parag the CEO is probably at one end. Fired, walks with ~$50m. Do you feel bad for him? Is it rude to say "He'll be fine."? No.
Ok now maybe at the other end we've got someone in the rust belt working at a steel mill. No other options. Private equity buys the mill and cans everyone. We both feel bad for that person. Full stop.
I just mean that the average employee of Twitter is way closer to Parag than to the steel mill worker. They're in the Bay. They cashed out at $54.20. There are other places to work. They are educated, connected, and have options. They will also likely get a severance. I think it'd be rude to 90% of the American workforce who struggles every day to not recognize the privilege of the people who will be fired from Twitter by Elon Musk.
> Saturday Night News: Musk fired the company’s entire senior staff “for cause,” an attempt to avoid paying out tens of millions of dollars in severance packages to the former CEO, CFO, GC and head of legal
https://twitter.com/MikeIsaac/status/1586539695491624960
Mr. Musk may also be testing Twitter’s engineers. He and his team have assigned some of them projects to complete, three people with knowledge of the matter said. One project involved changes to Twitter’s login screen, they said. Some engineers worked late into the night on Friday to complete the assignments, they said.