Fortune’s Dan Primack points outīut for U.S.-based employees who joined after Silver Lake and crew took over, you had to “be in it to win it.” In other words, these particular Skype employees wouldn’t get paid until the private equity firms also got paid. Here’s a nice letter I got from the Associate General Counsel of Skype that points out exactly how my stock options have “no financial value.” Even worse, Skype’s stock option agreement had special clauses that the Board had slipped in that gives them the right to “repurchase” any vested shares for anyone who leaves the company voluntarily or is terminated with cause - effectively taking “vested” shares and making them worthless. Skype employees have 5-year vesting of stock options, for example, not the usual 4 year schedule that most Valley firms have. The most important lesson I learned from Skype was that compensation and stock policies in PE-owned firms can be very heavily tilted in the owners’ favor and against the employees. Today, Yee Lee, a former employee shared his side of the story on his personal blog, giving more details on his predicament. It turns out the investor group, led by private equity firm Silver Lake Partners that bought Skype from EBay (EBAY) in 2009, had secured a so-called repurchase right that gave them authority to buy back the shares at the grant price. After a month of back-and-forth with Skype’s human resources department, Lee learned that even his “vested” options were worthless. Normally options give employees the right to buy shares at the price on the grant date, once they have worked at the company for a time. Well, that doesn’t appear to be the case and this morning Business Week reported that things are not as sanguine as the company makes it seem. An investor in the company argued that the money saved would be negligible and not worth the trouble.
Investors in Skype include Silver Lake Partners, Andreessen Horowitz and the Canadian Pension Board.Ī company spokesperson absolved the investors of any misdoing and said that the executive cuts were part of a long drawn-out decision-making process under the aegis of CEO Tony Bates. The Internet telephony company which is in the process of being sold to Microsoft for $8.5 billion is fast becoming a poster child of investor greed and corporate mistreatment of it employees.Įarlier this month, Skype cut many key executives, a move that is said to have been inspired by investors who were looking to extract the maximum value from the deal. the ugliness around Skype keeps getting bigger and bigger.
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