Uber's attracted a lot of attention over how it issues stock, because as the largest private unicorn, there are billions of dollars of wealth currently locked up in illiquid stock held by employees who would prefer to sell it.
With all this pressure building up in the kettle, it spills over from time to time into lawsuits like this one.
It's worth remembering that starting in 2013, Uber started blocking secondary stock sales and sometime in 2015 shifted from issuing options to RSUs. This had two effects beneficial to Uber: it created golden handcuffs for early employees, and prevented Uber from being subject to SEC disclosure requirements as the number of shareholders expanded.
Uber's practices on stock options are fairly unique in several aspects:
* a 30-day exercise window if you leave (even shorter than the much-disliked 90-day windows!)
* restricted "trading windows" where employees can only exercise options during four or five months of the year. Mixed with a short exercise window, this can be poisonous, imagine if you left the company and couldn't exercise your options before you left. This happened to a friend of mine at a now-public company; he lost about a hundred and thirty thousand dollars.
* the ability to early exercise stock (eg, before it has vested), starting six months into an employee's tenure.
Uber's main counterargument is that the plaintiff is a sophisticated individual (Stanford Law grad, experienced engineer), and he should have been aware that early exercising more than $100,0000 worth of ISO-type stock options converted them to NSOs.
This is probably true, but if an engineer with a law degree screwed this up, imagine what's happening to everyone else.
> Uber's main counterargument is that the plaintiff is a sophisticated individual (Stanford Law grad, experienced engineer), and he should have been aware that early exercising more than $100,0000 worth of ISO-type stock options converted them to NSOs.
It's more confusing than that. If your equity is valued at more than $100,000, if you exercise even one share early, the entire grant above $100,000 converts to NSOs.
This is a really, really easy point to trip up on.
> Can you elaborate on this? I'm about to exercise my first options before the end of the year.
These limits are set by the IRS[0]. As I understand it, if you're exercising vested options, you're fine as long as the value of the amount you exercise doesn't exceed $100,000. If you're early-exercising, though, your entire grant counts towards the total, because the IRS considers that all "early-exercise-able", even if you're only early-exercising one share.
However, I'm not a lawyer or an accountant, and this isn't legal or tax advice, so you should definitely seek advice from a tax attorney regarding this topic.
> imagine if you left the company and couldn't exercise your options before you left
As I understand it, once you leave the company, you're no longer subject to restricted trading windows. So you should be able to exercise thereafter without restrictions.
On a related note about candidates not understanding offers, has Uber stopped the practice of calling candidates in the morning, making them an offer, and demanding that they accept or decline by the end of the day? I doubt it was helping candidates understand their compensation package.
I worked at a competing company a few years ago and we had to deal with this with many candidates we were recruiting.
This happened to me a few months ago at a different company and I was shocked by how unprofessional I thought that approach was. I ended up declining the offer because I thought that kind of pressure to commit was an indicator of how poorly the company may be run. It was for a senior level position and I had been at the same firm for nearly five years and it just seemed unnecessarily aggressive.
It's not really an indicator of how well or poorly it's run, but it definitely is an indicator of the culture there (had a 48 hour exploding offer before, and the C brass culture was quite toxic).
I think it depends on how the culture is toxic. Amazon's culture seems to be "toxic" in a very specific way: that it selects for a very particular kind of person, with particular kinds of motivations - those who don't align with that are unhappy and leave quickly, those that are stay and perform very well.
I think there are ways Amazon could improve its culture, but apart from widening the potential pool of effective hires, I'm not sure it would benefit the company a huge amount. However I think Amazon is the exception to the rule, and in general I think toxic cultures are a significant hindrance to most companies.
I don't like this practice at all, just to be clear, but let me play devil's advocate for a second:
Let's say that a company is trying to hire for "a senior level position", as you put it. Let's also take it as an assumption that senior level positions are relatively unique, carry responsibility within the company, and are not a homogeneous fungible engineering role. In other words, you can't hire two people for one senior level position and squeeze them both in somewhere.
The company doesn't just interview one candidate at a time, much as a candidate doesn't interview only one company. If there are two candidates in the pipeline and the company likes both of them, it would be unethical to give both candidates an offer at the same time (since the company can only hire one person, it would need to rescind the offer from one of those two people if they both accepted).
So, the company might tell the candidate they like most: "We really like you for this position. We'll give you 24 hours to decide, and hold the position until then. After that, since we can't hold up our recruiting pipeline indefinitely while you decide, the offer may expire." If you are a candidate, getting an offer a day or two later than you're expecting could seem like a big delay, after all.
I assume that this is not what you were told, or how it was messaged, but how would you feel about a situation like that? How would you want it to be messaged? If multiple people are competing for one position, you can only have one outstanding offer at a time, which means it needs to have a reasonable time expiration so that the next-best candidate gets a chance to consider it.
Alternatively, I suppose you could say, "We're giving both you and someone else an offer simultaneously. First person to accept gets it." But that seems equally bad (especially since the candidate has no way to know whether it's even true).
It seems like the higher level a position you're interviewing for, and the more unique, the shorter a time window the company can have to leave the offer open. When someone is given the offer to be the CEO of a large company, do they get more than a day to decide?
Granted, none of this reasoning should apply to typical engineering positions that people regularly encounter, for companies that want to hire as many people as they can, and I am not trying to excuse pointless exploding offers.
> It seems like the higher level a position you're interviewing for, and the more unique, the shorter a time window the company can have to leave the offer open. When someone is given the offer to be the CEO of a large company, do they get more than a day to decide?
My experience is exactly opposite: For low level candidates, candidates are often reasonably interchangeable, so losing a candidate by demanding quick decisions is ok - you just pick the next on your list. For really high level candidates, the search cost can reach five or even six digits, and can last for months, and negotiations can go on for weeks. (EDIT: for actually high level positions, it's not unusual for the candidate to have their lawyer review documents etc. prior to accepting an offer as well, so one day deadlines would often be impossible in practice even if there was nothing to negotiate)
There can be truly desperate situations where someone badly needs a position filled right away, but that's generally a warning sign that they're understaffed and/or have not ensured proper cross-training, and will be a nightmare to work for if they've not learned their lesson.
Tell them that they can send the contract. It's not binding either way.
If you already have the contract. Tell them back that you need a few days to check your notice period and paperwork. It's just not possible to move that fast. (How the hell did they even made up a contract and a background check before they get the information?)
The more you go up the chain. The more exclusive (i.e. no other people in the entire city for this position) and the longer the negotiation might be (you're hell not leaving your place at the snap of a finger from a 20 year old HR person who's bullshitting you).
P.S. EVERY ONE gets more than one day to decide. Don't expect people to be available on phone or email whenever you want.
>It seems like the higher level a position you're interviewing for, and the more unique, the shorter a time window the company can have to leave the offer open.
It really depends on each side's BATNA [1]. If you have stronger walk away power, it's foolish for the offer to come with short acceptance terms.
Your whole line of reasoning is predicated on the following huge flaw:
>If you are a candidate, getting an offer a day or two later than you're expecting could seem like a big delay, after all.
In your very unrealistic CEO hypothetical, do you suppose it would be a big delay for you if you were offered the "CEO" position a week from Thursday instead of Monday, since between Monday and Friday they were trying to recruit another person?
I mean just how fast do you think these companies move! Do you imagine these people are basically in the waiting room, interviewing the same day - "So are you interviewing for the CEO position too?" "Yep. Do you know anything about this company?" "Just what I read in the Journal" "Me too. Hey, they're calling me." "Good luck!"
These things get easier when you don't read your emails every day.
You just check your email and then you discover the stupid offer is already gone. You can skip straight to the "acceptance" phase and the "god. they are really dumb".
This is just negotiation trick. In general, they might simply be interested in knowing if you are genuinely excited about the job or not.
In these cases you should just say "yes - I accept. Please send me paperwork for my lawyer to review and sign". Then the real negotiations starts :-) There is one book (forgot the name) which explains that tactic and how to respond to it.
I was given an offer with non-aggressive deadline of 2 weeks.
In terms of the equity portion, they were pretty straightforward with me and I had no surprises with my equity portion. In addition, none of my coworkers have complained about their packages either. I don't know this employee but he certainly doesn't speak for the vast majority of us.
That said I don't know what recruiters are doing these days. My boss would never let our recruiter pull shit like that, but I can't speak for other teams.
> none of my coworkers care. I'm sure very early employees may care but I don't know any and I can't speak for them
Interesting that your colleagues and you don't seem to care that the management had instituted policies that hurt the very engineers who first built up the company. I would be very wary of such a management that it would some day turn against me too.
I had an offer from Uber and was given sufficient time to decide and turn them down.
I had a whole host of reasons for turning them down many of which felt dirty/scammy/untrustworthy and nothing about this story surprises me but I didn't have the specific experience that you've described.
Just ignore it, it's shitty recruiter tricks. It might even be an individual recruiter and not SOP. I've never heard of this before from uber or on their glassdoor when I looked a while back.
> the practice of calling candidates in the morning, making them an offer, and demanding that they accept or decline by the end of the day?
Sounds like an effective filter to have applicants self-select for the combination of never questioning higher-ups and low diligence fast decisionmaking.
Brilliant in the same way as bad grammar in "Nigerian prince" mails.
Reminds me of my second job. I have a firm rule of answering phone calls only when I feel like doing so. I didn't feel like answering the call about the job offer over the weekend :). Still got the job.
The funny thing is, in general people tend to respond positively to you not being available every second of the day. Sometimes it backfires, but most of the time setting limits tends to 1) make you look busier, 2) signaling that your time is valuable to you.
Both tends to make people think you're more important and worth more, not usually make them strike you off their list and move on to the next person.
The exception would be really low level positions where they see people as interchangeable, but even then in most cases people have already mentally chosen you when they call, and not being available makes you more desirable, not less, so for them to move on they need to have cared very little to begin with.
... which is another reason to not be instantly available - I for one don't want to work for people who see little enough value in me to be prepared to drop me if I don't answer the phone 24/7 unless I've been contracted specifically to be available at any time (and you better believe they'll pay through the nose for that).
A lot of younger employees could do with learning to set boundaries, be unavailable and say "no", and experience how that can often get them a lot more respect and better job conditions.
It's not if you're offering a contract with shitty fishhooks designed to fuck over anyone who hasn't had a good lawyer spend some time looking over the contract - then it's a very rational ploy, with the side-effect of checking how easy it is to bully a potential hire into acting against their own best interests.
What you as an employee should think about that is left as an exercise for the reader.
If they're going to be that aggressive/shortsighted with negotiating, why not -- at least counter -- accept the offer Then, get competing offers and if Uber loses, quit.
If their compensation is substantially off, they deserve the employee churn.
Entry level offers made to students are really an entirely different ballgame. They're usually made months in advance of the expected start date, often as far out as 8-10 months.
I realize Uber is a big company and it obviously deserves some press, but I'm surprised just how many articles about Uber have made it to the front page of hacker news the past few days. And (almost) all of them have been very negative. I wonder if public perception will change and people will use their competitors more? Probably not enough to be noticeable. I wonder how Uber considers managing its brand, as they rarely seem to shy away from bad publicity.
With regards to this specific article, how common is this practice at other startups? From anecdotal experience, it seems common for startups to under inform employees with regards to their equity and how it works. I rarely meet a startup employee who understands what their equity is worth.
Making it top front page: Uber and AirBnB are likely the two startups that most people are waiting to see IPO (Dropbox like a year or two ago). Any of these companies is bound to garner attention when something big happens.
Uber is also aggressively recruiting. Many people on this board probably have been contacted by them or have been made offers by them. For what their comp promises, this would be very important for them, especially if they didn't do their due diligence on the company's financials and how their stock awards were set up.
I agree that very few people know how their stock works. To the valley's credit, a lot of places do RSUs which is a simple matter. But I definitely spoken with folks that didn't realize their exercise rights had expired.
> Making it top front page: Uber and AirBnB are likely the two startups that most people are waiting to see IPO
I upvote those articles for a different reason - Uber is the single company I'm most waiting to finally die, possibly with enough mess around it to finally drive the point that sociopathic behaviour and blatantly breaking the law is not a way to run a company in a civilized society.
The lesson Uber has taught me at scale is that if you break the law make sure you break a law that has perceived benefit to the people. Uber has the hearts and minds of the population because it's perceived as de-fucking the Taxi industry regardless of how it's gotten to where it is.
That is very true. Not only people do not go by themselves to learn who they're dealing with, they will ignore the negative stories if told - what matters is that taxis are considered expensive and crappy, while Uber is cheaper (and hot - at least within my social circle they won a lot by just marketing themselves as a startup!).
This too. No doubt they accumulated much hate for different reasons. Guess it would be better said if it's gonna be a boom or bust. I've been feeling like an IPO isn't going to happen for Uber for about a year now. There's a passage in Ben Horowitz's book that went "we drove so fast off that cliff we didn't leave treadmarks", paraphrasing. That's how I feel about Uber once news came out about how they were doing in China, then the new about spending near $1B in 6 months. People argue with me that institutions are dying to get into deals like Uber, but I don't know many institutions able to burn billions a year into a single investment. They get investors, they get loans. It's all good until no one is willing to put up more money and then it just fades away (or acquired like someone else said, but at what valuation? look at twitter from $70B to $11B now).
I don't think I've ever seen positive press about Uber and I think the negative press has helped it way more in getting mindshare than it hurt. After all, many people still have not used Uber, and many people also disagree with a lot of the bad press.
This sounds like a recent exchange I was relayed regarding Magic Leap. There, a former employee was promised certain rights––in writing, no less!––only to be defaulted on by the company's counsel, again in writing.
Until this fraud is prosecuted, its costs are too cheap for its benefits.
uber seems to be run very poorly from my exposure to them. when i was applying for jobs, they contacted me and said that theyd interview me in 2 to 3 weeks. My deadline for another company was in 3 weeks as well. They failed to schedule anything and contacted me after 3 weeks were up and said it'd be another month before they could interview me. For reference, Facebook flew me out and interviewed me on campus 2 days after I had my phone interview and 3 days after they contacted me originally. Either way, I wouldn't work there in a million years considering everyone i've ever met that works/interns there said they worked 60 hour weeks.
Boy, this is shaping up to be a terrible week for Uber isn't it? Kicked out of California, the Naked Capitalism post about their inevitable doom is gaining attention, $800MM loss this quarter, the UK labour board ruling means they may have to (retroactively and in the future) pay VAT, and now this.
I'm certainly happy. I can't think of a single company that as "ruined it" for startups more than Uber. Skirting around laws and regulations combined with absolutely insane valuations must have put completely unfair pressure on other startups.
Sure, but their sales are subsidized by VC dollars. I don't have all the data, but everything I've heard in every city says Uber pays drivers more than they charge riders, hence the enormous 10 digit losses annually. And once they raise rates, people will use their services drastically less. The question is can they make driverless cars work before they run out of money? And I really, really doubt it. That's many years away, and I don't think Saudi Arabia is going to give them a few more billion dollars.
Agree with this. Revenue is deceptive when you're undercutting the competition, especially when there's no profit to show for it.
And pay incentives for drivers are not only the surge charges but how many completed rides. That's likely to make sure there's enough supply on the road.
It may be the case they are losing money on rides - it may not be - you said it yourself 'I dont have all the data'. I dont think people should be so quick to say they are losing money unless you see the real numbers - which none of us will ever see until they do an IPO.
In my experience, the drivers are usually very happy to talk about Uber - including how much they're making. They will often tell you what they're getting paid for the same ride, which you can compare to how much you're paying. I have never seen them get paid less than what I was paying, and am often surprised how much more they're making (it can be 3x depending on the promotions).
Yes, this data is limited. But all signs point towards Uber hemorrhaging money with no easy way of becoming profitable. And we know that competition can easily swoop in by looking at Austin, where Uber and Lyft left. It's a race to the bottom until self-driving cars are a reality.
The maths in that article is terrible, all venture backed startups will have expenditure > revenue (because you're investing today for future revenue), you have to look at unit economics to understand if this is a problem or not (i.e. do customers cost more to service than revenue they generate).
I wonder if there is any legal argument that there is a trade 'dumping' issue if Uber are selling their services lower than the cost of producing the service. Maybe a news article to look forward to in 2017.
Even if they can, they won't have a structural moat. Too many others are developing this technology. Either someone will disintermediate private self-driving car owners a la AirBNB, or other tech companies will run fleets, or the car manufacturers will run fleets in the manner of GE's engine-hours program.
Uber is the greatest transfer of wealth from VCs to middle-class professionals in history.
They have some obligation to other startups to keep valuations low, for what purpose? Are other VCs going to suddenly put irrational expectations on the companies pitching them?
Any VC/company that engages in some unrealistic valuation pissing contest deserves any big expensive failure that comes to them. Otherwise they can prove people wrong at their own risk.
The article doesn't mention the FBI most wanted list, where did you get that from? Are you confusing ROKSO w/ the FBI? Spamhaus is a crooked extortion organization ran by former spammers themselves, not some squeaky clean protectors of the Internet.
I'm puzzled. I have been referring to a quite old article that doesn't mention anything about FBI anymore. Unless I'm heaving early Alzheimer, I can swear reading at multiple spots that Nathan Blecharczyk was once on 100 FBI top wanted. I'm confused by this, however I guess the minimum I can do is not mention that "fact" anymore.
From the article that was linked in a few posts up: He was running a major spam operation, and he got into a list of known spammers arranged by SpamHaus (an anti spam organization). The list happens to have about 100 people.
It's said that he received a few letters from the FBI and other law enforcements while he was running the operations. Nothing specific.
When it finally hits the bottom and it's for sale at non-unicorn prices, I fully expect to either see Amazon buy it up and merge it into Flex, or else Google/MS/Whoever buy it so that Amazon doesn't.
Amazon has enough cash on hand to do it, isn't afraid of losing money for years on end, and enough legal power to defend it (see: Google buyout of YouTube). The extra work density of both programs combined would make the sum more valuable than the parts.
[Bias: former Amazon Flex dev, though with no knowledge of any actual plans Amazon has]
I'd think Otto in particular would be enormously beneficial to Amazon. Amazon loves robots, and anything that reduces shipping costs (and times) would be incredibly valuable to them.
> ... the Naked Capitalism post about their inevitable doom is gaining attention ...
Not only am I glad that post is gaining attention (the entire series is excellent), I'm glad Naked Capitalism is getting attention. It's my favorite finance blog.
There is no tax _difference_. The only question is when you pay your taxes (on options above n 100,000); it's merely a cash flow thing. The TechCrunch arthor misunderstands that somehow there are tax savings (there are none;
the strike price doesn't change over the course of the option plan).
> Yet, months after employees started work, Uber breached its Employment Agreements by systematically imposing a different exercisability schedule than contained in the Employment Agreements which, according to Uber, disqualified most of the options from ISO treatment while presumably affording Uber with millions of dollars of tax deductions.
So this wasn't the TechCrunch author misunderstanding tax law. It is straight quoted from the lawsuit.
Let's say an employee has personal savings $100,000 and is granted $100,000 in stock.
If they have to pay 20% tax on what they exercise, then they can only exercise ~$83,000 of their options. The remaining $17,000 worth will need to be exercised at a later date.
Let's say the company then gets sold 3 years later and the employee's stock is worth twice what it was when they were offered it. The employee's additional stock now is exercised immediately and the difference of $17k between the strike price and the sale price is taxable as income.
Had they been able to exercise that $17k worth of stock 6 months after joining—which they would have had the money to do if they hadn't had to immediately pay tax on the amount they exercised—then that $17k would have been taxed as long-term capital gains, at a lower rate.
So you don't consider ISOs triggering the alternative minimum tax (AMT) on exercise as a tax difference? Or that a company can deduct the spread when NSOs are exercised? These are non-trivial tax differences.
The tax difference is that the long-term capital gains rate is 15% and marginal income tax rates are in the 30-40% range.
With ISOs, if you have a qualifying disposition, you get long-term capital gains on the entire spread between strike price and sell price. With NSOs you have to to pay regular income tax at the spread that exists at time of purchase: http://www.investinganswers.com/financial-dictionary/options...
This can be huge if shares are exercised post-IPO. For example, imagine you have an option with a strike price of $10. Your company goes public at $110 and stays roughly there for a year. With an ISO, if you exercise the option when the company goes public and sell it after a year for $110 you owe $15 of tax. With an NSO you are paying $30-40 of tax at time of purchase. This means you pay 25% more tax on the NSO.
Yes, there are AMT issues ignored in this analysis, but these work out to net-neutral once you account for AMT credits. This also ignores other benefits of ISOs such as not needing to come up with the funds for tax in order to exercise and secure your share. If you do owe AMT, Uncle Sam only charges 3-4% interest: https://proconnect.intuit.com/proseries/articles/federal-irs...
The TechCrunch author may have a misunderstanding but you do as well. Assets which always trigger AMT can result in very different tax outcomes than assets which _may_ trigger AMT.
Another article asserted that _Uber_ sees tax savings from the options over 100,000. I'll find it if I can (I'm currently on a hotspot on Caltrain). You're implying that the savings should be to the person, which is a different story.
Wait, wouldn't the AMT apply to his desired all-ISO scenario anyway? This is an actual problem; people can't afford to buy their ISOs either because of the AMT. What's the actual damage here done by NSOs?
Yes, there would probably be a lot of AMT to pay, but the taxes aren't immediately due as it is with non-quals / NSOs. Furthermore, the AMT can be used as a credit in later tax years depending on how one does their accounting... ISOs are very complicated.
When one exercises an NSO, the company must legally withhold or collect money somehow (at the very moment of the exercise) to cover the employee's tax liability. When the stock is not public (or upon an employee's election), the employee must pay cash up-front. Thus it can be impractical or impossible to gain anything from NSOs while the company is private. Another factor is that even if the employee can cover the taxes, the shares could lose potentially all their value at some later time. In this case the employee loses MORE than the value of the stock because they're also out of pocket for the taxes paid. (I've personally gone through essentially this latter situation).
I've heard of Uber employees getting special deals from banks and mutual funds that forward them cash to exercise the shares; in exchange the banks get some percentage of the shares (or nothing if Uber does not IPO by some date). There are some ROFR issues here (pre-IPO Facebook employees tried to do similar things) so I'm not sure how well it actually works. It's certainly damn complicated.
I've personally had ISOs, NSOs, RSUs, and another special other type of stock agreement at different points of time. I've had an accountant charge me $1800 to handle some ISO / AMT complexities on stock that didn't make me much money (I actually had net losses on most of the shares due to taxes). I've had managers, directors, and legal teams give me false or misleading information about what ISO / NSO packages were worth. These games are really not worth it for stock packages worth (even in the very best of outcomes) ~$1m or less. (Unless you're a laywer or biz-dev kinda person and enjoy them! )
My recommendation for makers / individual contributors: request RSUs if possible and prefer a simpler path to having taxes-paid money in the bank. Outstanding employees who really move the needle deserve exec teams who can deliver compensation that's valuable without tax games. Employee time should be spent on product and furthering the craft, not legal BS.
Any examples of pre-IPO companies handing out RSUs? I've seen posts about that on HN but it doesn't seem to be proven in the field. I've read that FICA taxes may actually be due on vest with RSUs, so either the employee pays or the cash-strapped pre-IPO startup spends cash on that, both of which are dumb when there are fully tax-deferred instruments available.
A smaller delta fix here would be to convert ISOs to NSOs with a very long exercise period (10 years) so you don't have to pay taxes until you can sell to cover the tax. I can think of several companies doing that now e.g. Pinterest.
Uber is pre-IPO and is currently issuing RSUs? Facebook also issued RSUs before IPO as far as I know. Right, that approach might not be possible for early startups. The Pinterest & Quora approaches here are pretty great and the companies have put in the time to have useful, rigorous discussion to validate the approach. Quite the opposite of what Uber seems to have done here with the ISO conversion & improper communication.
Another option for early startups is to support 83(b) and to, well, bonus the employee the strike so they can exercise immediately. I've seen a case where a key employee demanded they get a big bonus to cover a large strike in a new, large grant. (And he got it, and was butthurt over the bonus unexpectedly putting him in a higher tax bracket...). Facebook has handed out $100k signing bonuses to new grads... On one hand this all makes employee comp more expensive, on another hand there's the absurdity of CEOs and investors making several orders of magnitude more than the most influential employees.
Using double trigger vesting (the RSUs vest only when both the normal vesting period is up and the IPO/exit happens), the tax situation can be managed. I know of pre-IPO startups doing RSUs.
Sorry for the late reply but... doesn't double trigger vesting mean you forfeit the equity if you leave before the second trigger?? That's insanely employee-unfriendly. Extending NSO exercise windows is so much simpler.
> Sorry for the late reply but... doesn't double trigger vesting mean you forfeit the equity if you leave before the second trigger?? That's insanely employee-unfriendly.
That is right. These typically make sense only when the IPO is imminent.
> Extending NSO exercise windows is so much simpler.
Agreed.
With all this pressure building up in the kettle, it spills over from time to time into lawsuits like this one.
It's worth remembering that starting in 2013, Uber started blocking secondary stock sales and sometime in 2015 shifted from issuing options to RSUs. This had two effects beneficial to Uber: it created golden handcuffs for early employees, and prevented Uber from being subject to SEC disclosure requirements as the number of shareholders expanded.
Uber's practices on stock options are fairly unique in several aspects:
* a 30-day exercise window if you leave (even shorter than the much-disliked 90-day windows!)
* restricted "trading windows" where employees can only exercise options during four or five months of the year. Mixed with a short exercise window, this can be poisonous, imagine if you left the company and couldn't exercise your options before you left. This happened to a friend of mine at a now-public company; he lost about a hundred and thirty thousand dollars.
* the ability to early exercise stock (eg, before it has vested), starting six months into an employee's tenure.
Uber's main counterargument is that the plaintiff is a sophisticated individual (Stanford Law grad, experienced engineer), and he should have been aware that early exercising more than $100,0000 worth of ISO-type stock options converted them to NSOs.
This is probably true, but if an engineer with a law degree screwed this up, imagine what's happening to everyone else.