Startup employees getting screwed if leaving?

Sysdig / Eng
bKQb*R7!H5

Go to company page Sysdig Eng

bKQb*R7!H5
Oct 26, 2017 3 Comments

Suppose you worked in a startup for a couple years, vested and exercised your options paying AMT and such and then left.

If the startup ends up selling well a few years down the road, is it possible for the shareholders who left to get somehow screwed?

In particular, I’m not referring to normal dilution (because every shareholder should be affected, including the employees who stay, as usually successful startups don’t give refreshers big enough to offset dilution), mostly other creative ways through which investors/founders can screw ex employees.

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TOP 3 Comments
  • If u exercised your options, how would u get screwed? U mean exercise & hold? Then you’re just a regular stockholder. If company is public, sec should ensure u dont get screwed. If its still private, dig through contracts & hire a lawyer, but it may already be too late...
    Oct 26, 2017 1
    • Sysdig / Eng
      bKQb*R7!H5

      Go to company page Sysdig Eng

      bKQb*R7!H5
      OP
      Yes I mean exercise and hold, and that’s exactly what I was asking in the case the company will sell as a private transaction.

      I know a few stories of Skype employees having a “clawback clause” that allowed the company to buy back the exercised shares at a lower price (ugh!) than the liquidation sale, and something else that happened to the Facebook cofounder, the Brazilian guy. Horrible.
      Oct 26, 2017
  • Gen!x / Eng
    XPbr65

    Gen!x Eng

    PRE
    Bank of America Merrill Lynch, HPE, Northrop Grumman
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    mehy
    XPbr65
    If the company is private you can get screwed. READ YOUR CONTRACT.

    With a public company, how this works is settled case law. A privately held company has so many stipulations tied to later funding rounds and eventual IPO that it’s hard to speculate.

    The Skype case was unusual enough that it’s an anomaly. There are some other shitty instances like Good Tech.

    Luck plays a part too.
    Nov 4, 2017 0