There's a big, ugly story that Zynga threatened to fire employees unless they gave some of their stock back (WSJ, cnet). The internal memo explaining things doesn't really help. Zynga's always been sleazy so if the story is true it's no surprise, but there's some nuances worth exploring. If you're negotiating for a tech job argue for more stock, not more cash.

Tech companies give employees stock (or options) on hiring. The weird thing about that compensation is that the stock grant is generally fixed at the time of hire, before the company really knows anything about the new person. The resulting compensation is never really fair. Sometimes a great hire ends up not working out and ends up with more stock than they deserve. More often, an undervalued hire ends up doing great and it's a shame he or she doesn't have more stock. At Google my impression was most employees' stock grants were entirely uncorrelated with their impact at the company; grant size had way more to do with hire date.

Companies can try to fix inequitable compensation by rewarding good employees with more stock. But those grants always come much later when the strike price is higher and are generally much smaller than the initial grant. So extra stock after being hired seldom really works out. It's much easier to give a good employee a cash raise. The corollary to this is as a new hire, if you can afford to you should negotiate for more stock vs. more cash. Because while you can always get more cash later if you do well, you can seldom get more stock.

Another ugly aspect of the Zynga story is the use of "Google chef situation" as a metaphor for an employee getting too much stock. That refers specifically to Charlie Ayers, Google's chef 1999–2006, who reportedly made a giant pile of money from his stock options. To anyone who suggests he doesn't deserve that compensation: fuck off. Charlie worked incredibly hard at Google and did a great job growing a kitchen from one meal a day for 40 people to three squares for 10,000+ people. That kitchen had a huge impact on the success of the company; Google got an extra 200 hours' work a year out of employees because we wanted to eat at work rather than go out. Charlie personally was responsible for the kitchen's success. I assume "chef situation" is some sort of class distinction, that chefs don't deserve as much compensation as the hallowed engineers. That's disgusting.

  2011-11-11 16:08 Z