Cancelling shares which had positive value is problematic. It's highly unclear to me why these stock holders would not be given a payout unless there were liquidation preferences. Given the employees may have purchased the shares rather than having been granted these shares - a lack of knowledge on the behavior and existence of said liquidation preferences could give them legal standing.

We really need to see arrangements where the ultimately small pool of employee equity is above the liquidation preference of any investors. The transparency around such preferences is quite suspect.