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posted by hubie on Friday March 22, @04:34AM   Printer-friendly

'An act of dishonesty against the company' is among the violations cited:

SpaceX requires employees to agree to some unusual terms related to their stock awards, which have a chilling effect on staff, according to sources and internal documents viewed by TechCrunch.

That includes a provision that allows SpaceX the right to purchase back vested shares within a six-month period following an employee leaving the company for any reason. SpaceX also gives itself the right to ban past and present employees from participating in tender offers if they are deemed to have committed "an act of dishonesty against the company" or to have violated written company policies, among other reasons.

Employees often aren't aware of the "dishonesty" condition when they initially sign up on the equity compensation management platform, one former employee said.

If SpaceX bars an employee from selling stock in the tender offers, the person would have to wait until SpaceX goes public to realize cash from the shares — and it's unclear when that will happen, if it ever does.

[...] It's not uncommon for additional terms to be attached to employee stock compensation at startups, and employees who stay with the company long enough to vest stock may have acquired stock under various stock plans with various conditions. Yet no employee at startups and private companies is entitled to sell their stock without their employer's approval.

Indeed, at SpaceX, if an employee was fired "for cause," the company stated it can repurchase their stock for a price of $0 per share, according to documents viewed by TechCrunch.

"It sounds unusual to have [a] cause type exclusion provision in a tender offer agreement," attorney and stock options expert Mary Russell told TechCrunch. She said it is also unusual for a traditional venture-based startup to have repurchase rights for vested shares that are unrelated to a bad-actor-type "for cause" termination.

These terms "keep everyone under their control, even if they have left the company," one former employee said, because employees don't want to be forced to return their valuable SpaceX stock for no compensation. "And since there is no urgency by SpaceX to go public, being banned from tender offers effectively zeros out your shares, at least for a long time. Even though you paid thousands to cover the taxes."

"They also try and force a non-disparagement agreement on you when you leave, either with a carrot, or a stick if they have one," the person said.


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  • (Score: 2, Touché) by Anonymous Coward on Friday March 22, @04:58AM (6 children)

    by Anonymous Coward on Friday March 22, @04:58AM (#1349779)

    If SpaceX ever goes public, its IPO price will either be AT the moon, or quickly move TO the moon. People will buy it at gross excess, feeling that it may do exactly what the Tesla stock price (arguably invalidly) did - go up, and go up some more. They'll pay prices that assume that into it.

    It will start high, then go higher. Unfortunately because it did that, it will do that again - and the stock will be SO over-valued (can you even put numbers on that these days?) that the crater it would make on earth when it comes back down would be nothing short of a moon-fall. Still, the people with even a single share of employee-vested stock will be billionaires.

    what a just.... hard to even think about. Probably the best time to buy in is at t=0 or t=28 months. Just guessing, though. The best time for an employee to sell would either be at 3 days or 3 months. The company itself, selling the stock at IPO, will never have to search for a single dollar, ever again. heh.

    • (Score: 1) by khallow on Friday March 22, @05:19AM

      by khallow (3766) Subscriber Badge on Friday March 22, @05:19AM (#1349782) Journal

      Still, the people with even a single share of employee-vested stock will be billionaires.

      Assuming the stock vests in time. With terms like this, who knows what crazy shenanigans could happen.

    • (Score: 4, Interesting) by janrinok on Friday March 22, @07:09AM (4 children)

      by janrinok (52) Subscriber Badge on Friday March 22, @07:09AM (#1349785) Journal

      Disclaimer: I don't dabble in stocks and shares so I have a genuine question.

      Would that put it in the "too big to fail" category, thereby forcing the government (who are rather relying on it nowadays) to prop it up no matter what? The knock-on effects would seem to be quite severe for the USA.

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      • (Score: 4, Insightful) by pkrasimirov on Friday March 22, @07:16AM (2 children)

        by pkrasimirov (3358) Subscriber Badge on Friday March 22, @07:16AM (#1349787)

        When NASA has all their Moon eggs in the SpaceX basket, and the spy agencies want them to run spy satellites, you bet it's one of them too big to fail boys.

      • (Score: 3, Interesting) by gnuman on Friday March 22, @06:44PM

        by gnuman (5013) on Friday March 22, @06:44PM (#1349881)

        Would that put it in the "too big to fail" category, thereby forcing the government (who are rather relying on it nowadays) to prop it up no matter what? The knock-on effects would seem to be quite severe for the USA.

        SpaceX could be deemed imperative to US's national security and if Musk doesn't play ball, it will be he that will have his shares zeroed out and all assets nationalized. The most important being the employees. It's one of the reasons why only Americans and permanent residents holders can work there.

  • (Score: 5, Insightful) by JoeMerchant on Friday March 22, @01:20PM (2 children)

    by JoeMerchant (3937) on Friday March 22, @01:20PM (#1349806)

    Traditional "shareholders" are conferred certain rights, including the right to corporate governance.

    >If an employee was fired "for cause," the company stated it can repurchase their stock for a price of $0 per share

    Then this so-called "stock" has been reduced from shares in the company and should be relabeled as what it is: "carrot and STICK employee motivation tools."

    "For cause" is an indefinable term, like intent. The above clause is equivalent to salary claw-back at management's discretion. I believe most labor laws forbid claw-back.

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    • (Score: 2, Disagree) by DadaDoofy on Friday March 22, @01:41PM

      by DadaDoofy (23827) on Friday March 22, @01:41PM (#1349811)

      A stock option is not "salary". Apples and oranges.

    • (Score: 4, Interesting) by gnuman on Friday March 22, @06:41PM

      by gnuman (5013) on Friday March 22, @06:41PM (#1349880)

      And most likely, the extra stuff surrounding their stock has not been tested in court and it probably even less valid than Musk's Tesla bonus plan.

  • (Score: 2, Touché) by istartedi on Friday March 22, @05:49PM

    by istartedi (123) on Friday March 22, @05:49PM (#1349861) Journal

    "Vested". You keep using that word. I do not think it means what you think it means.

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