Quotulatiousness

June 26, 2011

Skype’s PR problem over their sneaky options plan

Filed under: Economics, Law, Technology — Tags: , , , , , — Nicholas @ 13:35

Over my career in the software industry, I’ve worked for several companies who provided a stock option plan as part of their employee compensation scheme. Exactly one of those companies’ programs ever provided me with any actual tangible benefit (the company was bought, and the options were bought back at market rate). It netted me a couple of thousand dollars. Options may have been a way to get rich in the early 1990s, but they’re pretty much a longshot lottery ticket now.

Skype has found a sneaky way of making that longshot chance even more unlikely to pay off:

Employees aren’t even able to keep the vested portion of their stock options. The vast majority of stock options granted to startups have a vesting period, typically four years, with chunks of those options becoming vested during that four year (or whatever) period. If options are vested you can exercise them, pay for the stock and own that stock. At least that’s the way things have been done over the decades.

Skype did things differently. With Skype stock options the company has the right to not only terminate unvested options, but also vested ones. And any vested options that you’ve exercised (meaning you paid cash for them) that were turned into actual shares could simply be bought back by the company at the price you paid, regardless of their current value.

Turning your potentially lucrative stock holdings (if the value was higher than your strike price) into a mandatory zero-interest savings account. Nice.

The fact that Skype adopted this plan in the first place isn’t in itself “evil.” But they’ve done two things wrong from what I can tell.

First it appears that employees had no idea what they were signing and they probably expected it would be a normal stock option type deal that everyone in Silicon Valley has done for decades. If Skype wasn’t crystal clear with them, and explained it in normal human language that they understood, then these employees were intentionally misled. Skype had an incentive to make things unclear, because employees would demand far more compensation if they had understood. The fact that employees are so surprised that this is happening suggests that they didn’t understand the agreement. This is what lawyers call fraud.

The second thing Skype did wrong was not to waive this clause with the looming acquisition. The company can deny all day long that they fired these employees for cause, not to save a few dollars on stock options. But the appearance is the exact opposite.

How much did the salary cap change the NFL?

Filed under: Business, Football — Tags: , — Nicholas @ 13:14

If this analysis of the 1975 Minnesota Vikings roster by John Holler says anything, it shows that the biggest change in NFL history was probably the introduction of free agency and the salary cap:

Many players believe the 1975 Vikings were the greatest team in franchise history. But, in the free agency era, there would have been no chance they could have kept the team together. Fortunately for Vikings fans, those players were locked into contracts that didn’t allow them leave. But, what would the ’75 Vikings have cost in modern-day dollars? Too much. Consider the following:

Fran Tarkenton was nearing the end of his career, but had never missed a game and was viewed by many as the best quarterback in the NFL. Given the current wage paid the top QB, Tark could easily have been given $15 million or so.

Chuck Foreman would have been entering the third year of his rookie contract and, most likely, would have held out in order to get a better deal in the current era. The Vikings would acquiesce and he would sign a deal of about five years for $45 million, with $15 million or so up front. Current cap total about $30 million.

On the offensive line, Mick Tingelhoff would likely not be earning top dollar, but would still be worth about $3 million a year. Guard Ed White would likely be coming up for free agency himself and would probably cost another $5-6 million a year. Ron Yary, the first overall pick in the 1968 draft, would likely be in the second or third year of his second contract, which, given his five straight Pro Bowl appearances, would probably put him in the $12 million range. So far, five players would have the Vikings on the hook for about $50 million, without even touching the Purple People Eaters.

In short, free agency and the salary cap totally changed the economic side of the game, and ensured that more teams would be competitive over the long haul.

Anti-semitism at the University of Toronto

Filed under: Cancon, Education, Liberty, Politics — Tags: , , — Nicholas @ 11:54

Post-graduate students at the U of T may have gotten a bit too honest and outspoken in class:

Picture the following: A discussion in a post-graduate university class on the topic of Jews turns ugly. The professor is uncritical when one student says he doesn’t want to be around Jews. Another student complains about “rich Jews,” implying their excessive power. In a subsequent class, the same professor, as if to validate those points, says half her department faculty are Jews and with her approbation, students conduct a ‘Jew count’.

While this sounds like an episode in Germany leading up to the anti-Jewish Nuremberg Laws, it occurred more recently and much closer to home, at the University of Toronto’s Faculty of Social Work. Now, more details are emerging under the exceptional circumstance of two U of T professors publicly criticizing a colleague for facilitating classroom anti-Semitism and the university administration’s inadequate response.

The controversy began when some visible minority students in a Social Work Master’s program at the University of Toronto expressed discomfort about being around “rich Jews,” in Professor Rupaleem Bhuyan’s class, regarding a proposed outing in 2009 to the Baycrest Centre, an internationally renowned Jewish geriatric and research facility. They were undoubtedly confident of a sympathetic ear from her. The previous year, Bhuyan denounced Israel as a satellite of the United States, unworthy of distinction as a separate country.

The few Jewish students in Bhuyan’s Master’s Program class were intimidated into silence for much of the discussion by a classroom culture slanted against them. Finally, one young woman spoke up, protesting her grandparents had come to Canada with virtually nothing and she was proud her family could now afford the fees for them to reside at Baycrest.

That must have rung an alarm bell for Professor Bhuyan, because startlingly, she then admonished her students not to divulge what transpired in class to outsiders.

H/T to Ilkka for the link.

Product warnings

Filed under: Humour, Law, Technology — Tags: , , , , — Nicholas @ 11:46

Many weird and whacky warnings get attached to products as a result of product liability concerns, but some of them must be generated without legal prompting:

Warning #2: Booze Blues

Seen on a Terrestrial Digital outdoor antenna: “Do not attempt to install if drunk, pregnant, or both.”

Of course, if you’re drunk and pregnant, you probably have bigger problems.

Warning #3: Three-Dimensional Danger

Seen on a Samsung 3D TV disclaimer: “Pregnant women, the elderly, sufferers of serious medical conditions, those who are sleep deprived or under the influence of alcohol should avoid utilizing the unit’s 3D functionality.”

Man, those drunk moms-to-be just can’t catch a break!

Warning #4: Options, Options

Seen on a computer software package: “Optional modem required.”

The writer’s mandatory English language class, incidentally, was not completed.

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