This story completely misses what the lawsuit is actually about. It isn't just a bunch of employees who are pissed that the stock went down.
Employees' RSU agreements stated that Uber would deliver their shares 6 months post-IPO. A few days before the IPO Uber decided to amend the agreement and accelerate the vesting, so shares would be available on IPO day itself.
Why did they do this? Uber is legally required to withhold taxes during a vesting event. The most common way to do this is to sell a percentage of the shares immediately on vest. This, however, increases the total number of shares in the market and depresses the stock price. To avoid this, Uber decided to pay for the taxes out of their own pocket and claim a percentage of the shares for themselves (basically a private stock buyback).
By moving the vest date up, Uber gambled on the fact that the stock price would be higher in 6 months, and the move would thus benefit both themselves (less out of pocket spend for withholding) and the employees (difference taxed as capital gains rather than regular income). Instead the opposite happened and both parties lost out. More importantly Uber reduced their own risk by locking down their total liability at the IPO date itself and exposed their employees to the whims of market fluctuations.
Thanks. The article initially read as if people had held their stock as if it was an investment and are mad they didn't sell to cover the tax bill sooner. After your explanation it is much clearer.
tl;dr Uber accelerated vesting of employee grants so that they happened during the lockout period. Also they could have proactively taken more out to cover taxes for the employee but chose instead to take the minimum out.
Employees' RSU agreements stated that Uber would deliver their shares 6 months post-IPO. A few days before the IPO Uber decided to amend the agreement and accelerate the vesting, so shares would be available on IPO day itself.
Why did they do this? Uber is legally required to withhold taxes during a vesting event. The most common way to do this is to sell a percentage of the shares immediately on vest. This, however, increases the total number of shares in the market and depresses the stock price. To avoid this, Uber decided to pay for the taxes out of their own pocket and claim a percentage of the shares for themselves (basically a private stock buyback).
By moving the vest date up, Uber gambled on the fact that the stock price would be higher in 6 months, and the move would thus benefit both themselves (less out of pocket spend for withholding) and the employees (difference taxed as capital gains rather than regular income). Instead the opposite happened and both parties lost out. More importantly Uber reduced their own risk by locking down their total liability at the IPO date itself and exposed their employees to the whims of market fluctuations.