Ask HN: I exercised my options on leaving a company – now told they're 'void' | Hacker News Reader

Ask HN: I exercised my options on leaving a company – now told they're 'void'

I worked at a company in Canada, which was incorporated in the US.

After leaving the company I decided to purchase my options, because I thought it could be worth the gamble.

Fast forward a few years later, the company is acquired and we've been informed that all our stock is now void and we won't get anything.

The stock I got was common stock. I'm really just curious if this legal. I can understand if we got a little bit back, or if we got shares in the new company. Also, I understand that shares will get voided in case of bankruptcy, but that doesn't seem to be the case.

When getting common stock, are we completely slaves to whether or not the company feels like honoring them?

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You'd need to know the details. Perhaps the company had taken on debt during earlier rounds of funding, and was obliged to pay back the debt to those investors before there was any profit left for stockholders. So the company was bankrupt after paying back some or all of its debt.

Or perhaps the common stockholders are just getting screwed.

The suggestion to pursue legal advice is a good one.

Thank you, we'll definitely get some legal advice!

Common stock is at a mercy of preferred shares i.e. shares that VC's negotiated special terms for.

I.e. VC investing is startup can ask for 10x times return on his investment in case of acquisition. If agreed - he will tap in the jar first. Then founders. Then the rest (if anything left) will go to unaware employees.

This "term sheet" is usually not disclosed to regular employees who are often too excited to work for puny salary and be given NNNNNNN likely worthless shares.

Regardless - if you own shares and been told "sorry, no money left for you" - need to send lawyer-crafted letter to the owners.

Mark Zuckerberg tried to screw his co-founder by diluting his co-founder's shares. His co-founder then sued him successfully. Stockholders have strong legal protections in many jurisdictions. You definitely need a lawyer to fix this for you.

After having dealt with lots of employees, he somehow made his company a success and it was ready to be acquired. CFO told him to dilute employees. And he never had a problem finding good employees the next time, so yea you can do it and get away.

I’ve had my shares diluted from $2000 to $50 a long time ago, but if it’s “void” after a dilution then I’d like to have the math explained to me...

What is the reason why they were diluted in your case? Was it "nefarious" (e.g. targeted specifically at you) or just a consequence of unfortunate circumstances (e.g. heavy downturn, aggressive liquidation preferences, ...)?

The company ran out of latest round of funds without increasing its value, and took them best deal it can. In the years since it had diluted around that much, again.

This is a public company, not a tech startup.

How is it possible to "dilute employees" from a technical point of view? Most of the times, even early employees, VPs and founders have common stocks, so how can one legally dilute just some employees without screwing the other common holders? Genuinely curious.

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