The employees that get their shares stolen can sue for extortion, which is exactly how I and most people would describe this situation. Unfortunately the law generally favors those with more money and resources.
Whether it is moral or whether it will hurt them in the future are different questions.
Definiton of extortion (from wikipedia):
Extortion (also called shakedown, outwresting, and
exaction) is a criminal offence which occurs when a
person unlawfully obtains either money, property or
services from a person(s), entity, or institution, through coercion.
You are acting as if they are being asked to give away something that they own; they are being asked to give up future compensation.
I put this in another comment: "However the problem with your math (and most others in this thread) is this: lets say Zynga values me at 4 shares, and I get 1 vested per year. However after two years, and a few splits, I have 128 shares.
The company hired me to work as a 4 share employee, then it grew like crazy and I became a 128 share employee. This is normal in tech nowadays, most people take it for granted that you just get lucky and accept your windfall. But the fact is that you are a 4 share employee being paid 3000% of what you were hired at."
I know this goes against the way it's always been in the tech industry, but it is not extortion.
I am simply trying to explain why this is a moral issue and not a legal issue.
This is the equivalent of saying: 'your gonna have to take a pay cut or were gonna have to let you go'. It is morally repugnant and goes against everything we believe in the startup community, but it is not illegal, nor should it be.
It is the equivalent of saying 'you need to take a cut in pay or you will be laid off'.
In most other kinds of contingent pay that's tortious: if you promise a building contractor contingency bonuses upon meeting certain deadlines, and then you purposely interfere to make them miss the deadlines so you can get the work cheaper (and admit doing so!), you're probably acting illegally. Heck, even basketball players have sued over instances where a team kept them out of a few games solely to cause them to miss performance targets.
The exception is M&A earn out or vesting for key hires, which is often yearly, and sometimes even crazier; 1/2/3/4 where it's 10% the first year, 20% the second, 30% the third, and 40% the fourth.
That latter vesting is pretty crazy - with each year, each point is usually getting nonlinearly more valuable as well.
Not only is it shady it is a legal term and that term is called bad faith, if you can prove the party acted in bad faith, which if what is being reported about, return it or get fired, then that one is pretty locked up, then they are in violation of the spirit of contract. Faith is one of the foundations of contract law. If you are found to have not honored the faith portion of the contract then more times than not, you will be on the loosing end of a contract dispute.
I think the fact that it continuously vests after a cliff, that it's clear in basically every options grant that you don't receive unvested options upon termination, and because employment contracts repeatedly emphasize that employment is completely at-will makes it pretty clear that you shouldn't count your unvested option chickens before they hatch, and hard to prove that you could reasonably expect to vest all options. The employees that have been there for multiple years will have already vested a big percentage of their stock regardless of what happens.
I think Zynga is repulsive, and will hopefully get punished hard on many fronts for this, but I'm not convinced that what they're doing is strictly illegal. I'm convinced they'll get sued, though.
Now the company says "give us back 2014 and 2015 or you're fired". What would you say?
It's not at all clear-cut. See sections 5-6 of this article: http://www.bernabeipllc.com/pdfs/stockoptions.pdf
The larger issue though here is that of a contract. The company has in essence said "we want you to stick around and so we are giving you an incentive of stock options which vest on such and such a schedule."
Later they are saying "give up what we gave you or leave so we can take them back." It's this choice here which says clearly "we are going back on our contracts with you."
A close example might be this "We are giving you a raise and will pay you retro pay next month when this goes through but you have to work fewer hours at your hourly wage" and then the next month saying "sorry, no retro pay for you."
I think this would be a fun case. And now that class action cases have taken a few serious setbacks in the courts, it seems to me that Zynga really should be getting sued by lots and lots of employees in individual lawsuits..... One piranha may be good for dinner, but don't wade into a swarm of them.
If I'm a small company just getting started, what do I have to attract top talent? Maybe I can't afford to pay as well as the established companies, or maybe my benefits are going to be worse (or nonexistent). But I do have stock options. If I'm a fledgling corporation, stock options can get me more talent than I could otherwise command, and if I'm a skilled engineer, I feel like I can directly affect the fortunes of this company and thus my own net worth if I am compensated heavily in stock options which, in the unlikely chance that all goes better than expected, could make me wildly rich.
Your hypothetical four-share employee certainly didn't sign on just on the strength of those four shares alone. And, quite possibly, the employer played up the possibility of those four shares becoming many more shares down the road if things go well.
They are. They own those stock options, with the provision that they stay out the life of the vesting period. They are now being prevented from holding up their side of the contract. They would gladly stay through the vesting period if allowed to.
What they are doing is like hiring a salesman on low salary + commission and then firing them the day before the commission is paid.