How employees get screwed in private equity deals

learned a hard lesson from working with a bunch of rat bastards leading private equity firm, Silver Lake.  I joined Skype after the company was spun out of eBay  by SilverLake in deal valued at $2.7B and was recruited to help accelerate the pace of product development and make the Skype app more web-oriented.  I was at the company for just over a year in a product management role and felt like my team accomplished some important things along the way, including reduction of software development cycles from months down to 2-weeks and delivery of a whole new advertising revenue stream to the company.   It was a fun and challenging job, involving tons of international travel and I met some amazing people along the way.

Now despite the fact that Skype has a Palo Alto office and kind of seems like it would fit right in with Silicon Valley tech companies, it turns out that the employment terms for a Silver Lake company are *very* different from what most Valley high-tech employees are used to.  Here are three important things to watch out for if you’re thinking about joining a company that is being managed by a private equity firm or if your company gets taken over by a PE bank.

1. Lawyer Up

(image credit: http://weheartit.com/entry/5625871)

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.  Skype employees have 5-year vesting of stock options, for example, not the usual 4 year schedule that most Valley firms have.  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.  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.”  (see lee.pdf).  Gee, thanks.

Now, I’ve seen my share of legal documents for tech companies.  I’ve worked in Valley tech companies for over 15 years, have founded startups, done VC financings, and invested in companies.  None of that prepared me for the kinds of legal shenanigans that the PE guys at Silver Lake pulled because I had never come across those kinds of terms before, let alone the fact that these clauses were hidden as one-liners in otherwise pretty standard-looking documents.  (see Stock Option Grant Agreement for Kuo-Yee Lee – signed)

So my first point of advice to anyone considering working for a PE-lead firm is to LAWYER UP — it’ll be worth your while to get an attorney to carefully review all employment documents so that you know what you’re really getting into.

2. The Bobs

Working with Silver Lake was my first opportunity to witness up-close-and-personal how a PE firm does its business of restructuring a company that they’ve just taken over.  And it was breath-taking.  The firm inserted itself into every level of the company.  At one point in my tenure at Skype, Silver Lake had representatives or consultants on the Board, in C-level executive roles, in technical leadership and operating roles, and all the way on thru the organization to the person actually running our software deployment schedule…   So Silver Lake put its fingers really deeply into Skype’s pie and they started rearranging things.

You can agree or disagree with the practice of re-organization, but I personally had never been part of a restructuring that ran so deep in a company.  During the year I was at Skype, the company:

  • hired and fired a CFO
  • gained a CEO, CMO, CIO, and CDO
  • created an entirely new product development org structure
  • eliminated every Project Manager role
  • fired, re-interviewed,  and re-hired Product Managers
  • created a two new business units
  • combined two business units into one
  • dissolved one business unit
  • opened a new office and hired several hundred people
  • the list goes on…
I mean, these are crazy changes for any company to go through over the course of years.  To have that all happen within a short number of months was staggering.  The conventional wisdom in Silicon Valley is that good engineers and product designers will always have job security.  Still, there were times at Skype when even really solid engineers and designers were asking me if their jobs were going to be safe from all the changes going on.
So, second major lesson learned: prepare your resume and get ready to re-interview for your job (or a different one) because organizational change is a major part of the private-equity-lead restructuring of a company!

3. It Ain’t Over ’til It’s Over

Even if an employee of a PE-owned company has avoided the legal beartraps and weathered the re-org’ing, they’re still not safe.  Even as Skypers were celebrating the huge potential of the Microsoft deal, the PE bankers were sharpening their knives and plotting which employees to fire in order to maximize profits and minimize payouts to non-owners.   Seriously, how greedy do you need to be to make $5B and still try to screw the people who made that value possible?  I mean, Silver Lake is trying to hyper-optimize their returns to the point that they’re trying to deny employee payouts that amount to less than 0.3% of the returns that they’ll get from the deal.  Srsly.  Really?

So, just be warned: Silicon Valley startup folks may think we’ve had hard dealings with venture capitalists…  But in my opinion, VC greed pales in comparison to the level of greed exhibited by the Silver Lake private equity firm.

And there you have it, my top three lessons learned from being raked over the coals by a PE firm.

Have your own story?  Leave a link or comment below!


93 Comments on “How employees get screwed in private equity deals”

  1. Nicholas says:

    Yee, I can’t believe you waited until AFTER we’ve left Skype to share this knowledge!

    :-))

    My favourite moment of the Two Bobs approach from Silverlake was when the Chief Transformation Officer (nice title!) called for a meeting and started making pronouncements about how we all had to be more efficient. One thing he wanted to see less of were big meetings. ‘After all’, he said, ‘any meeting with more than 4 people is just inherently useless’. We all awkwardly glanced around the room at the 8 attendees he’d invited, and we stared blankly at him. He started mumbling about how this particular meeting didn’t count as he didn’t add any value to it and we were the real contributors. He got some pitying smiles from the room, and then he lumbered on with his 48 slide PowerPoint about how to be more efficient….

    Nicholas

    P.S. My second favourite part of the Two Bobs approach – and it’s very close second – was that they created a logo for the re-org. I mean, they actually had a designer do a logo for a company re-org. Pure class.

  2. Ben says:

    You should look at it from the investors’ point of view too. If there are people willing to work under such terms, then why should they give more generous benefits to employees, especially for the ones who are not fully dedicated to the company? I understand you are angry because you left before the MSFT deal and lost all your options, but investors didn’t screw anyone. All this information was communicated clearly and employees knew that they will lose the options if they leave earlier. You should read the terms carefully. I think it’s fair to not reward such job-hoppers, like Yee appears to be, who are just looking to cash in from IPOs and who are not fully dedicated to building great products. There are many Skypers who don’t have such “bright” resumes, but who put their heart and soul into their job and should be rewarded for their long-term efforts. And that’s why investors laid out such terms.

    • Jeremy Liles says:

      Vesting schedules create the loyalty incentive, not sneaky clauses; in my opinion the way the contract was drafted indicates an intent to bury the clause, not “communicate [it] clearly.” And I’d be interested in what happens when your theoretical hyper-diligent prospective employee asks to review the Managing Partnership agreement that is cited in the stock option agreement.

      • guest says:

        If you think the clause was deliberately bured, get an attorney and sue. Labor + employment shops often take contingency cases. California law is not friendly to employers on this point.

      • seo agencies says:

        the thing is that most employees aren’t that savvy, and are actually gullible enough to trust the promises of getting rich off stock options

    • Matt says:

      I’m not sure you understand what vesting means. Vesting schedules are specifically for penalizing job-hoppers, like you say. Lee expected to lose his unvested options because of leaving Skype. He didn’t expect to lose his vested options as well, due to a completely indecipherable clause buried in a long paragraph, which in turn refers to another document he didn’t have ready access to. The rest of it sounded like boiler plate and there’s no way any non-lawyer can tell that vested does not really mean vested.

      • why says:

        No they are not, they are just like when a shop says it costs 0.99, just a trick to make employees feel they are getting a good deal.

    • oh4real says:

      You apparently missed the main point: the repurchase of VESTED shares from employees fired “with cause” or who left because they didn’t want to be a MSFT employee. As stated, everyone expects to loose options, but vested = owned property.

      Even loyal, long-term “dim” Skypers could have their vested shares taken back if they are fired prior to sale to MSFT and conversion to public/liquid stock, which it appears is also happening.

    • why says:

      WTF!? job hoppers? what about company pirates like those CEOs and shareholders who just reap all the profits generated by the hard work of real employees?
      Do you mean that because some people accepts to be enslaved for 5 years to get some peanuts anybody else who is doesn’t want to put through such unfair treatment is a bad guy?
      Wake up, somebody else is taking the profits of you and others hardwork and doesn’t give a **** if you are commited or not, because once the company starts to decline they will reap the few money left and go to shrink another ship, after all they do really work to make money… not to be slaved like you.

  3. Mac says:

    If there is one company in the private equity space that should especially not be trusted, it is Silver Lake. Someone will always get screwed over when they are involved. They are greed incorporate.

  4. philips66 says:

    Why stop with Silver Lake only? what about the other investors? What about the board of directors?

  5. [...] are many more details in this blog post from Lee, which includes the letter he was sent by Ricardo Velez, Skype’s associate general counsel. [...]

  6. #firstworldproblems

  7. pwb says:

    The Silver Lake a-holes got their money. Good for them. Unfortunately, I think Skype may be at a top. There’s little reason to think that Microsoft ownership is going to be a positive for the service.

    Ben, what planet are you from? Yee is taking responsibility and helpfully communicating to others not to get burned by unscrupulous outfits like Silver Lake. If you read the post you will find that, no, things were purposefully not communicated clearly in a transparent effort to screw employees. If you think that’s all fine and dandy, I feel for you.

  8. Yee, you left voluntarily Skype *before* the Microsoft deal was known. I agree with Ben, it’s normal that you lost all your options, especially considering you stayed only one year at Skype.

    If you want to talk about how people got screwed, talk about how every Skype employees from the eBay days lost all their unvested RSU (Restricted Stock Units) when SilverLake bought Skype. That is a scandal.

    • yeeguy says:

      I count myself fairly lucky as having gotten off with just an “expensive lesson”. I’ve talked to multiple ex-Skypers who are WAY worse off — the folks who lost truly life-changing amounts of money because they had to turn in eBay RSU’s (which would have had predictable time-based vesting into liquid assets) in exchange for Skype options (which have turned out to be worthless due to the unusual way Skype’s option plan works).

      These are folks who had contributed to Skype for 3 or 4 years in some cases and now have nothing to show for all that work because they were mislead into thinking that they had “regular” stock option packages when the truth was very far from that. I encourage any and all of the folks in that situation to please come forward and talk about your experience — my story is just the tip of the iceberg.

      • name says:

        Yee, your story IS the tip of the iceberg. Thanks for bringing it up though, as nobody else has dared to speak up, although a lot of people with years at the company have been screwed far, far worse. People that were there even before eBay.

    • Matt says:

      It’s typical if an employee leaves before the cliff. Lee apparently left after the cliff, but even then the vested options were made effectively worthless because of some indecipherable legalese.

      Apparently Microsoft’s board has not approved the acquisition yet and hopefully the acquisition can somehow be scuttled from most of Skype’s employees leaving. I guess that wouldn’t be good for the handful of Skype employees remaining who would actually be able to exercise their options, but I would love to see Silver Lake lose out from their utterly unethical behavior.

    • Mike Keenly says:

      However much one doesn’t like what happened here, it is not uncommon. A startup I had recently worked for (to remained unnamed) was acquired by a public company. All employees’ stock was zeroed and those employees remaining at the company when the acquisition was completed received a retention bonus in proportion to their vested shares. Those employees who had previously left the company and had exercised their stock got nothing. I was at this company for 4 years. Mr. Lee was only at Skype for 1 year. I’ve been at a number of startups in my career and I’m sorry, one year is not much of a personal sacrifice. Be thankful this lesson was not that costly.

      • why says:

        What’s wrong with you guys?
        He worked for 1 year and got paid for 1 year, what is the personal sacrifice of that private investors who take the money out of real workers just for pure greed?

    • I would be too... says:

      The deal was made to look like a normal vesting schedule (25% after a 1 year cliff, then regular vesting after that) and the one year cliff in these plans is specifically there for retention. So if Silver Lake had a clawback provision they intended to use all along for a more draconian retention plan (i.e., you need to stay to play) then there would appear to be no need for a 1 year cliff except to give employees the impression that this was a normal options agreement. The absence of a cliff would have alerted employees that this was not a standard agreement which would probably have brought the more draconian measures into the light. When people in this thread and others say Silver Lake may have misled employees, I think this is most likely what they mean regardless of whether there was language elsewhere, caveat emptor, etc.

      Whether Mr. Yee was a great employee or otherwise, I think the outrage is that this really goes against the spirit that 99.99999% of the valley operates on. I think it’s understandable that people feel outraged since this is something that happens maybe (if you’re lucky) once in your life.

    • jt says:

      Sorry, that’s not at all “normal”. It’s only normal to lose unvested options, not vested options. If SilverLake/Skype screwed other employees even worse, it doesn’t invalidate any assertions that Yee was screwed too.

  9. Ivan says:

    I can’t believe you didn’t read the agreement when you signed it. Caveat emptor. Employee retention is standard in private equity.

  10. [...] Yee Lee, a former employee shared his side of the story on his personal blog, giving more details on his predicament. The most important lesson I learned from Skype was that [...]

  11. H-Bob says:

    If you want to play with legal technicalities, the Skype stock is different from the limited partnership interests. The language in the option agreement discusses selling the Skype stock to the Master Partnership but not about selling the limited partnership interest (perhaps the Plan or the Master Partnership agreement discusses the sale of the limited partnership interest). In such event, you would still own the limited partnership interest even though the Master Partnership would own the Skype stock.

    If you are also required to sell the limited partnership interest, then you could argue that the Option Agreement is misleading because it does not discuss the requirement to sell your limited partnership interest. Under Section 12, the Master Partnership holds the Skype stock on your behalf (one reason for that structure is to limit the actual number of Skype shareholders and thereby permitted Skype to avoid registration under the 1934 Act). The last sentence of Section 12 of the Option Agreement could be viewed as having the same purpose — your Option Stock is exercised and then held on your behalf by the Master Partnership. If the misleading language of the Option Agreement violated the federal Securities Act (also check California law), then the remedy is recission — however, that remedy might be difficult to figure out since your payment for the Option was non-monetary (i.e., staying with Skype).

  12. [...] taking back your Skype stock Phil Wolff 24 June 2011 4:55 pm Dear Yee Lee, thanks for your How employees get screwed in private equity deals blog [...]

  13. [...] Yee Lee, a former employee shared his side of the story on his personal blog, giving more details on his predicament. The most important lesson I learned from Skype was that [...]

  14. [...] original blog post from Yee Lee outlines his take on the situation at Skype and more generally how private equity deals are …. It doesn’t sound healthy. Then again, this is from someone who left so naturally his [...]

  15. [...] reading this article at GigaOm about the latest adventures of Skype, I came across this quote by Yee Lee, a former employee of Skype: You can agree or disagree with the practice of re-organization, but I [...]

  16. [...] How employees get screwed in private equity deals « FrameThink. Comments RSS feed LikeBe the first to like this post. [...]

  17. You know, what’s really interesting is how SilverLake has put themselves into a position with such a high profile deal that they’re basically been exposed for doing this to almost every hack and startup geek in the Valley. It’s the talk of the town. In the last 24 hours, almost everyone I’ve spent more than 5 minutes with has mentioned this happening to me.

    I agree with your advice about lawyering up. I think one real take away is to look at the contracts. However, I think it’s just as important for SilverLake to “make right” their reputation with the Internet industry. They might have a ton of money, but this kind of treatment will hurt them for a very long time as they look for top talent to help them restructure-and-flip again. These kinds of choices tend to follow PE and VCs around for a looong time.

  18. [...] are many more details in this blog post from Lee, which includes the letter he was sent by Ricardo Velez, Skype’s associate general counsel. I’m [...]

  19. Some Guy says:

    Stock options are supposed to motivate people. If they are too complex, vague or untrustworthy, they don’t motivate anyone.

    For me the stock options are like a lottery win – maybe i’ll get it, maybe I dont. I am certainly not motivated to do anything over what I’d normally do by this BS option program. If anything, i’m slightly demotivated by the apparent bad taste left in the mouth by any such program.

    What motivates me is my job and getting paid reasonably well at the end of the month. You want to make your life into a lottery and run errands for clever suits who set up some clever scheme that may or may not work for you (but is guaranteed to work for them!) – your choice.

  20. Len Chermack says:

    If there is a legal argument which might come forth, then I am sure lawyers will be only too happy to litigate. I have empathy for those with vested shares who might lose value due to repurchasing agreements. I find that practice a bit manipulative because it was planned for probably to exact such penalty without the option holder’s knowledge from the creation of of the agreements. Very sneaky legal move,but if legal then you and other employees vote with your feet and leave. A company is not a company very long if there they are losing “valuable” employees. As for someone who leaves early but vested, well that vesting is a part of his or her’s overall compensation. It’s sort of like earning a bonus for accomplishing the goals set out and you were recruited with, but then find out they did away with bouses.

    Unfortunately with this economy and limited options for many, we find the favor has shifted to the employers, but pendilums swing and I am sure memories are long, especially in Silicon Valley.

    With social media and awareness of such issues, Silver Lake and other of the like, might find it hard to recruit great people in the future for their invested portfolios. Their payback will come if the LP’s and fund to funds find the practice reduces their chances of better outcomes.

    Lessons learned as we say, you took one for the team. There is rarely a “fair” outcome for those impacted. Kind of like energy deregulation, those of us who’s energy bills doubled and paid the monthly amount, recieved pennies back after the energy companies were forced to rebate. We got screwed because what we paid and received was not returned at the rate of contribution and immediate.

    Life is never fair except if you are the lawyers on the winning side.

  21. silver lake revealed says:

    Thanks for the inside story…

    What skype alternative do you recommend?

  22. [...] ownership of Skype, and stands to make a huge windfall from the Microsoft deal.Case in point: Yee Lee, an employee at Skype who quit some time back, just learned that all his vested options had been [...]

  23. [...] and other provisions in the Management Partnership agreement.And here’s the letter the employee received when he was terminated:CNN calls the language “intentionally incomprehensible.” Reuters [...]

  24. Nietzer says:

    great! TX for being so coureagous to speak up, well written. true, one better Be careful right from the beginning. such Hidden one line items to Be found in brick and mortar Businesses as well ….Nietzer

  25. Well this all happened because you’re a stupid asian moron with no real-world skills or logic present in that stupid asian skull of yours. You’re a stupid CUNT, a worthless COG in a machine, and you should shut that rice-scented mouth of yours. You’re an idiot and you’re advertising it ALL over the fucking internet. I hope you end up on the street, asshole.

    • why says:

      It seems racists aren’t extinct yet… evolution dictates that the fittest will survive and people with such small brains wouldn’t go too far in the long run. Don’t have children! do it for your country!

    • Dick Cheney says:

      Why is Michelle Bachman on this list now?

  26. Moderate this, cunt………..

  27. If you were smart at ALL you’d realise that these firms are doing some of the most ingenious money-making in the WORLD and you’re crying about the delicate flowers that get crushed underfoot? They’re WEAK and STUPID. And SO ARE YOU. You should JOIN these private equity firms, if you were so fucking clever, and make yourself some serious dough instead of WHINING about it all over the web 2.0. Get real and realise you’ve invested serious years of your life in SHIT. Absolute, wasteful, useless…….. SHIT.

    • Dr Frankenstein says:

      Hey Seymour, I’m building an idiot – can I borrow your brain?

    • yourmuther@anonymous.com says:

      So a private equity monkey is some how not a wasteful shit but engineers who actually make something are? riiiiight. And the people who work there are the most clever, really? the same assholes who brought the banking system to its knees?

      Yee, see if this guy is posting from either a) a mental institution or b) Silver Lake or c) Andresson Horowitz.

  28. [...] If you haven’t seen the reports yet, a quick scan of Reuters, CNN, TechCrunch, and Bloomberg will fill you in. For a more personal account, one of the employees affected, Yee Lee, has posted his experience on his blog, FrameThink. [...]

  29. [...] Yee Lee, a former employee shared his side of the story on his personal blog, giving more details on his predicament. The most important lesson I learned from Skype was that [...]

  30. bitsmelter says:

    Wow, thanks for the heads-up! It’s certainly made me go back through my Option Agreement to double-check for stuff like this.

    So, just to be clear, the language in question is the last sentence of Section 12 (quoted below)… right?

    “If, in connection with the termination of a Participant’s Employment, the Ordinary Shares issued to such Participant pursuant to the exercise of the Option or issuable to such Participant pursuant to any portion of the Option that is then vested are to be repurchased, the Participant shall be required to exercise his or her vested Option and any Ordinary Shares issued in connection with such exercise shall be subject to the repurchase and other provisions in the Management Partnership agreement.”

    • yeeguy says:

      Yeah, I think that’s the “gotcha” sentence.

      • Stacy Cowley says:

        were you ever given access to the Management Partnership agreement? That is a nasty swap of legalese, but it also seems very questionable if you/your lawyer had no chance to see what those “repurchase and other provisions” were.

      • yeeguy says:

        I unfortunately never saw the Management Partnership until a month after resigning. :-( And I think a lot of current Skype employees *still* haven’t gotten access to the Management Partnership agreement.

  31. [...] company, it terminated not only his unvested stock options, but his vested ones as well. Yee Lee wrote an essay last week describing how, after working at Skype for a little more than a year in product [...]

  32. [...] private equity The Skype/Silver Lake story is refusing to die, with Yun Lee’s revelations bringing out the same anonymous investor-group sources defending Skype’s actions. [...]

  33. [...] company, it terminated not only his unvested stock options, but his vested ones as well. Yee Lee wrote an essay last week describing how, after working at Skype for a little more than a year in product [...]

  34. Sandy says:

    Shame on you Skype – Silverlake. This is unethical – forget what the fine print says. You have destroyed your brand

    Where is Microsoft ? No moral responsibility on this at all to ensure you stop the PR bleeding happening ?

  35. Anyone who ends up working for a company that has a Private Equity investor needs to learn about what that really means. There are plenty of tricks and trade secrets in Private Equity designed to reduce risk for the PE Firm and increase their upside (at the expense of everyone else). If you’ve worked in PE, these things are obvious, but even for very experienced business people, they aren’t so obvious.

    If you want to know more of the tricks to how PE makes money, you should read Private Equity Secrets Revealed. It’s not just about employee contracts, but everything about PE tries to extract value as quickly as possible from portfolio companies. You can find the reading here:

    http://www.theprivateequiteer.com/private-equity-secrets-revealed

  36. [...] Skype product managers Yee Lee found this out the hard way. His blog posting about his experience as a former exec at the company makes interesting [...]

  37. Anonymous Coward says:

    It’s not apparent that Mr. Lee had a copy of the Partnership Agreement when he was granted his options. Hence there’s no way he could know that there was a possibility of his vested shares becoming worthless. That would fail the smell test.

  38. [...] to attract talent by means of stock options at the best of times. And one thing we know from Yun Lee is that Silver Lake is not shy about inserting its own people at all levels of its portfolio [...]

  39. Harold says:

    You got lazy, complacent, a bit overconfident (even cocky?) and sloppy. And unfortunately it did cause you to get hammered.

    As with many things in life, it’s a painful lesson, but chances are you will not make a similar mistake again. That is the upside.

    I’m sorry that you lost the $70K but you don’t go into engineering to get rich.

    It pains me to say this, but although Silver Lake acted in a very unsavory manner, they technically did what they were entitled to do.

  40. Quora says:

    Is Skype really as evil as it seems?…

    Basically the whole ongoing mess regarding the firings (http://framethink.wordpress.com/2011/06/24/how-employees-get-screwed-in-private-equity-deals/). I haven’t been following closely, so I’m worried about being pulled in by sensationalist reporting…

  41. [...] Skype/Silver Lake story is refusing to die, with Yun Lee’s revelations bringing out a same unknown investor-group sources fortifying Skype’s actions. But if [...]

  42. Onefineham says:

    It’s pretty tough to think you have a good deal or package only to find out you’re the next loser in three card monty.

  43. [...] the facts of the Skype case. It involves an engineer named Yee Lee,  who worked at the company for a little over a year, enough time for the first installment of his options to vest. When he left, he assumed he would be [...]

  44. [...] Yoo 在自己的博客上写道 我在硅谷科技公司工作了 15 [...]

  45. [...] investors saw an opportunity to maximize the company’s value.Former employee Yee Lee wrote a personal blog entry explaining the inner workings of Skype. Lee was among the recently terminated employees let go in [...]

  46. [...] employee Yee Lee wrote a personal blog entry explaining the inner workings of Skype. Lee was among the recently terminated employees let go in [...]

  47. Russell says:

    I hope you and other sue them. I hope you win. They are slimy bastards.

  48. [...] the facts of the Skype case. It involves an engineer named Yee Lee,  who worked at the company for a little over a year, enough time for the first installment of his options to vest. When he left, he assumed he would be [...]

  49. [...] been a storm around Skype ever since former employee Yee Lee let rip and accused the company’s investors, Silver Lake, of screwing employees over in its $9 billion [...]

  50. [...] been a storm over Skype ever since former employee Yee Lee let rip accusations that company investor Silver Lake Partners had screwed employees over in Skype’s $9 billion sale [...]

  51. [...] posted this in response to Kara Swisher’s attempt to justify Skype’s behavior towards Yee Lee and wanted to preserve it.  I edited out some opening [...]

  52. Yee I posted my thoughts on my blog about your situation and why I think this whole mess will have an impact on Silicon Valley. http://bit.ly/kLAWa8

  53. Bob Teh First says:

    Mr Yee

    since you went to almost full disclosure, why don’t you publish email dated 19 april 2010 titled ‘Your Stock Option’ which was sent to all employees – each employee with own version of Grant of Options / Grant Date.

  54. [...] Lee aired his surprise publicly on his blog. The gist of his complaint was that Skype’s terms were anything but the Silicon Valley norm. In [...]

  55. [...] received close to $100,000 under the standard VC terms (on vesting). Lee’s Lesson Learned blog entry spells out why he was surprised when he received nothing from Skype’s exit and his thoughts [...]

  56. [...] Lee aired his surprise publicly on his blog. The gist of his complaint was that Skype’s terms were anything but the Silicon Valley norm. In [...]

  57. [...] it turns out, this isn’t really Silicon Valley practice at all. In a blog post, a former Skype employee, Yee Lee, noted that he had 15 years of experience in Silicon Valley and [...]

  58. [...] Yee Lee thought he had the choice — and decided he wanted to exercise his options. He knew the rules, knew he had to make his choice quickly, and made that choice. He informed Skype’s HR department of what he wanted to do, in a more than timely manner — and then spent a month going back and forth with them, before learning that Skype was refusing to let him exercise his options at all. [...]

  59. [...] How employees get screwed in private equity deals via Wired [...]

  60. [...] stock option awards.  The situation received widespread attention in Silicon Valley following Lee’s rant on his FrameThink blog about how the practice was contrary to start-up company norms, at least by Silicon Valley [...]

  61. [...] How employees get screwed in private equity deals (source) [...]

  62. RZ says:

    I really want to see a case like this litigated. ‘Vested’ has meaning, dammit.

    I have seen the pe before. It was not pretty.

  63. [...] taking founder shares into escrow and having confusing good / leaver bad leaver language inserted (Yee Lee comes to mind more often that you’d think !), or severely restricting exercise periods for employee [...]

  64. borsa says:

    Hi !
    Thank you for the article, it is really interesting like all your blog, I found here many good advice :)
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  65. [...] $(function(){ $("#startbox").html("Links to what I’ve been reading recently.How employees get screwed in private equity deals « FrameThinkDean Bubley’s Disruptive Wireless: Something to watch – voice comms and voice apps in the [...]

  66. [...] who appears to have lost his stock options in Skype had written about his experience in a blog. The letter Ricardo Velez, Skype’s associate general counsel sent him is available here, and the [...]

  67. [...] of Silver Lake’s sale of Skype to Microsoft.  Former Skype employees, including Yee Lee, cried foul at Silver Lake’s clawing back of their vested options, saying that they were not aware of the [...]

  68. [...] It gets weird, I googled Skype this morning and apparently there are a few articles and blogs online that have negative things to say about the company. I found a blog from someone who used to work there and didn’t receive any of their stock options after they left the company, read here. [...]

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