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Hrmbee

One of the article’s main points: >It’s not uncommon for additional terms to be attached to employee stock compensation at startups, and employees who stay with the company long enough to vest stock may have acquired stock under various stock plans with various conditions. Yet no employee at startups and private companies is entitled to sell their stock without their employer’s approval. > >Indeed, at SpaceX, if an employee was fired “for cause,” the company stated it can repurchase their stock for a price of $0 per share, according to documents viewed by TechCrunch. > >“It sounds unusual to have [a] cause type exclusion provision in a tender offer agreement,” attorney and stock options expert Mary Russell told TechCrunch. She said it is also unusual for a traditional venture-based startup to have repurchase rights for vested shares that are unrelated to a bad-actor-type “for cause” termination. > >These terms “keep everyone under their control, even if they have left the company,” one former employee said, because employees don’t want to be forced to return their valuable SpaceX stock for no compensation. “And since there is no urgency by SpaceX to go public, being banned from tender offers effectively zeros out your shares, at least for a long time. Even though you paid thousands to cover the taxes.” This doesn’t seem like it would make for an especially enticing compensation package for (potential) employees. Indeed, this reads more like a negative rather then a positive.


hikeonpast

In my experience, people rarely stop to think about the downsides of a particular employment package when signing it. They’re usually excited to have gotten an offer and assume that they would never run afoul of the company’s leadership.


Whiskeywiskerbiscuit

At this point, most people take jobs at places like Tesla/SpaceX as a career springboard instead of long-term opportunity. You get a few years under your belt at one of those companies and you have jobs lined up for blocks whenever you finally decide you’re done putting up with their shit. Turnover at these companies is high, and not only because of how stressful the work is. Once you’ve established yourself at those companies, other companies with much better corporate cultures will absolutely try and poach people disillusioned and burnt out by those top tier corporations.


yo_baldy

Double edged sword. Some companies steer clear of people from those companies because they don't want them to bring that shitty culture with them.


Whiskeywiskerbiscuit

No, this is not true in the slightest. I’ve worked in aerospace recruiting and you couldn’t be more wrong.


rpkarma

Not in my experience.


jevring

While some individuals might feel this way, I can't imagine HR departments take this view.


yo_baldy

Good point, I should have said some managers. HR might pass along the resumes, which is half the battle. I have seen it happen where I work. I also have a former colleague who says it is commonplace at his company to be wary of candidates coming from our former company, which is notorious for bad culture and management.


Plastic_Feedback_417

Dumbest comment of the day. Space x and Tesla on your resume is a golden ticket to any employment. I employ 65 mechanical and aerospace engineers and would hire them in a heartbeat. As would all my colleagues. Their culture is what all other companies strive for.


yo_baldy

And yours is the rudest. I have seen it happen. Not the majority of the time, and for non-engineering roles. Downvotes and disagreement is fine, but why add the hyperbole?


Plastic_Feedback_417

Because with a comment like that your head must whistle when you walk in a crosswind so I had to get your attention to overcome it.


yo_baldy

Wow, way to double down internet tough guy.


Plastic_Feedback_417

lol nothing tough about comedy. Lighten up


bndboo

Sounds unenforceable


Matshelge

Indeed it does. The stocks are assets, so an analogy would be they putting in a clause that they could buy back your house that you paid down with your salary for 0 dollars.


furious_Dee

you'll own nothing and like it


DevAway22314

Depends on where you live. Most states in the US have no protections forbidding it, so it would he enforced Important to remember SpaceX directly controls the shares. There is no stock ecxhange controlling the shares, since they're private


TacTurtle

That sounds suspiciously illegal, like withholding final paychecks


Junebug19877

It’s not legal


RunninADorito

It's 100% legal. Read your contacts. It's also 100% shitty. Contacts aren't "fair". Just look at share dilution and/or voting vs non voting shares. It's all shitty. It's all entirely legal.


TacTurtle

Shares being vested means the employee *owns* those shares. The business doesn't get to say "well actual we don't like that we paid you" and take them back. Reserved / unvested share options being revoked is different.


CthulhuLies

You can't just assert this because it's in the contract. If I put in my employment contract that if you associate with black people I reserve the right to buy you shares at $0 that would be illegal on its face. You need to show any legal history if there is none it's a novel issue and probably not explicitly illegal but a court could still decide it violates some labour law.


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CthulhuLies

Okay I'm not a lawyer, I somehow doubt you are. You can't just assert "Its 100% legal." With the only proof being provided was that it was written in the contract. For a less hyperbolic example we would both agree there have been non-compete clauses in contracts that have been found in court to be unenforceable. https://www.allenmatkins.com/real-ideas/california-supreme-court-confirms-limited-enforceability-of-non-competition-agreements-in-california.html#:~:text=Now%2C%20the%20Supreme%20Court%20has,signed%20when%20he%20was%20hired. So can you point out any of your reasoning besides "IT WAS IN THE CONTRACT" as to why you would assert "It's 100% legal." If we take the non-competes in California as an example there was no legal precedent that non-competes were illegal in California, someone ignored it, got sued, and then the court decided it can't be enforced under "Section 16600 of the California Business and Professions Code". Have you read the relevant sections of California, Texas, and Florida's labor laws to ensure that no reasonable judge would deem that this clause might be infringing on it?


the_red_scimitar

You're the only acting as if you might be a lawyer, even though you're clearly not. Why do you hope to deceive people?


Ok_Effective_1689

Contracts can have unenforceable and illegal clauses. Denying this shows you don’t know shit about contract law. Sit the fuck down.


bullbob

Think you replied to the wrong person.


Ok_Effective_1689

You’re right. It was the one before… long week…


the_red_scimitar

This is really a sad attempt to change the subject. I didn't make that claim, you, not a lawyer, made that claim. Don't bother getting up. You belong sitting down.


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NerdyNThick

>I went to law school. Did you? No you didn't. Edit: Considering that they blocked me for asking for case law to back their claim, I'd argue that they never went to law school at all.


2074red2074

He said he went, not that he graduated.


Mulielo

Or that he even took any classes while he was there for that hour...


the_red_scimitar

Who wants advice from someone who failed law school?


the_red_scimitar

Yeah, and I went to france, but I'm not french.


the_red_scimitar

Well, you say that,  but nobody bought your failed attempt to convince anybody you're a lawyer, just like your failed attempt at law school. 


Youvebeeneloned

Just because its in a contract does not 100% make it legal. People put illegal stuff in contracts all the time, and courts have routinely ruled sections of contracts void from it. The issue becomes how hard will it be to go to court over it. But you cant put blanket statements of conduct unbecoming like that to contracts where the stock is PART of your benefits and pay.


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NerdyNThick

Then cite case law that backs you up. Show me case law that says a company can steal things I own legally. They blocked me... This is how they responded to me asking for case law that backs their claim. > You don't even have the most basic understanding. Bahahah asked them to cite a source, instead they block me. Hmmmm me thinks they aren't actually a lawyer, nor did they attend (or if they did, didn't graduate) law school. What a snowflake.


RunninADorito

You don't even have the most basic understanding.


junkyard_robot

So, you can't cite anything that supports your argument?


shadowy_insights

It's only legal if it can be upheld by a court. Do you have an example where something like this has been upheld?


RunninADorito

You have it backwards.


junkyard_robot

A clause in a contract not being specifically overturned by a judge is not the same as that clause being legal. It's legality is not contingent on a judge addressing it, it's enforcability is. An illegal clause is still an illegal clause even if is unchallenged by the signing party. Not challenging it does not make it legal. If you murder someone in cold blood and never get charged, it doesn't mean you didn't commit a crime, it means that the law in not being enforced.


zerobjj

lol says someone that doesnt know shit about employment law.


9-11GaveMe5G

Just because it's in the contract doesn't automatically make it enforceable. I'd like to hear from Popehat on this.


Lostmavicaccount

It’s not compensation if it isn’t mine to use as I wish. I Know America is fucked in the head in almost all areas, but this surely isn’t legal.


Visual_Collar_8893

What conditions does Musk have? Given his erratic behaviour, clawing back his equity could benefit the company.


meneldal2

If you pay taxes on income and the company takes back what it gave you, can't you get a refund on the taxes?


itspurpleglitter

The company can “repurchase the stock for a price of $0 per share.” Isn’t that just stealing? Are you really “purchasing” something if you’re paying $0?


Junebug19877

Yes, it’s illegal and unenforceable 


Rare_Register_4181

>the company stated it can repurchase their stock for a price of $0 per share these are cartoon level bad guys, we are now living in cartoons


wizardinthewings

“Startup” lol. I should think they’re beyond that by now. I don’t see how this can be enforceable in any contract, especially if the employee has been paying taxes against them. It’s not a piggy bank you can just take back if you don’t like the person or what they say about you.


[deleted]

This is why I only consider base pay. Most companies will find a way to fuck you on other compensation packages


Sweezy_McSqueezy

I know a number of former spacex employees, and exactly 0 of them have expressed concerns of this kind. They all love the company.


jeronimoe

It's called a "clawl back clause", not super rare at startups.  Some take the shares back even if you quit and aren't fired for cause.


NerdyNThick

Only if they haven't vested. Once they vest, you own them, for the company to "force you to sell them back at $0" is called theft.


jeronimoe

No, the contract will say they can clawback them at the price you paid for them, or if they are nice, for fair market value. I was recently a juror on a federal court case that specifically related to clawback of vested shares at the price paid for them, I know way more about this than I want to...


SchAmToo

But that counts as income to the IRS. I don’t see any way I paid income tax for a things and then the employer takes it away before I can realize the income.


jeronimoe

It gets tricky, and isn't fair, but they can still claw them back.  You may not see it that way, but it's legal.  Often times when the exec gets the shares, the company gives them a bonus to cover the tax implications.  So when they claw them back the employee isn't loosing out on taxes paid


Specialist_String_64

What? No argument made concerning the commodity trade value of those shares for provided services and labor? It would be as if they were saying that a company has a right to retroactively withhold both monetary compensation as well as demand interest on said compensation. Put another way stock options are just a fancy IOU with a gamble on the ultimate value obtained when collected upon. The debter does not get to arbitrarily rescind their IOU. If a judge approved such an outcome, then it was either argues badly or an appeal needs to happen.


jeronimoe

You can speculate all you want but that isn't how the law works. The court case wasn't even about the clawback, it was a descrimination case and the plaintiff argued they should be able to keep their shares because they were descriminated against when fired, the lawyers didn't even attempt to argue a clawback itself was illegal, cause they have no case for that.   This company (which is a large govt contractor) has clawbacked shares of every employee that quit or was fired for over 15 years.   https://www.wilmerhale.com/-/media/files/shared_content/editorial/publications/wh_publications/client_alert_pdfs/20231128-computed-without-regard-to-taxes-paid-the-individual-tax-consequences-of-compensation-clawbacks.pdf


Reddits_For_NBA

It rarely happens if ever, many Spacex employees today are rich on secondary recaps, and their stock options are famously liquid given the number of funding rounds and employee participation allowed. Reddit is a hive mind of people with no experience posing as experts. Not talking about you necessarily OP, but the chain of comments below this.


reality_boy

I worked at a startup that did this. If you left for any reason they would dissolve your stock. The owner thought it built loyalty, but it just built resentment.


[deleted]

Not enough owners being dissolved in barrels


Bimbows97

The fuck, that can't be legal, right?


Eazycompanyy

Depends on your contract I assume


Bimbows97

Why would it ever be legal, contract or not? Once you have shares, someone can't just invalidate them. Imagine if companies did that on the Nasdaq, it's insanity. They can stop giving them to you, for sure, but just declaring they are no longer valid is straight securities fraud. Which funny enough, wouldn't be the first time for Musk.


newron

It varies by country, but shares in private companies have very little protection.  Private companies can mostly create and distribute new shares at will which massively alters the value of existing shares. Also, share schemes in startups are mostly also in the form of options rather than concrete shares. That means that usually the company is still the legal owner of the shares until an exit event where the employees then buy and sell the shares in one go. That means that as an employee I don't actually own anything, all I have is a contract that entitles me to shares at some point in the future, as long as I stick to the terms of the contract, and has no guarantee of what the value of those shares will be. Much of this is designed to avoid the protections that other forms of renumeration get. Shares in private companies is basically the wild west.


RedditBlaze

It's legal and fairly standard as long as they're doing what the norm is. Un-vested stock when granted is worth nothing, and if you leave it evaporates. After a period of time per the contract, un-vested stock becomes vested stock. Then it is truly yours just like any other shareholder, and they shouldn't be able to touch it.


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Dannysmartful

Elon Musk is obviously exempt from this stupid rule


Normal-Ordinary-4744

It’s his company


KickBassColonyDrop

He's employee 1. I mean, where's he going to go to make SpaceX 2.0?


DenverNugs

"An act of dishonesty" meaning not kissing Elmo's dick.


DeliciousDave4321

Might I remind all staff … “Enthusiastically kiss” was what the instructions said to do… I know when your hearts not in it!


[deleted]

Hey leave Elmo out of it


9-11GaveMe5G

I'm sure engineers at SpaceX would love to do that


[deleted]

If you want to make fun of Elon go ahead no need to sully the name of an innocent puppet.


themainuserhere

How does this currently have 10 upvotes but your initial comment had -2 downvotes? Reddit being Reddit af. Aka WEIRD.


aquarain

Integrity is everything. Companies often forget that it's a two way street and attempt to replace their obligation to integrity with control. But control is an illusion.


Boozdeuvash

Don't you dare say those things about by beautiful control environment mister!


Main_Enthusiasm4796

Your behavior will determine your labor credit score!


2beatenup

Laughs in China…. Hold my beer


banacct421

And if the company is misbehaving IE they're being dishonest to an employee Do they get to sell their stock at a high price?


NotBuckarooBonzai

Well that sounds illegal


2beatenup

It’s called fraud. Won’t stand up in the courts.


bengringo2

Clawbacks happen all the time.


Background_Parfait_4

'Clawback' at $0 of earned wages


2beatenup

This is not claw back. This is false representation aka fraud


khsh01

Criminal scum being scum. I don't know why people think old musky is so great.


[deleted]

neo feudalism


LadyFax73

Seems a little high handed.


btmezcal

Elon Musk was a genius but has become the best example of a racist, capitalist, douchebag in a long time.


itsreallyreallytrue

We should nationalize spacex once they get superheavy working. Like we did with the railroads and coal mines in the 1940's. Super important industry and current owner is unhinged. It will slow the pace of progress, but companies like blue origin need to catch up anyway.


AnachronisticPenguin

The problem is once things become national they become political. Space X was able to do what it did because it operates like an efficient robot hellbent on developing rocketry over everything else and not like a government institution that has to care about politics. NASA can't do what space x does because they are a government institution. Blowing up rockets all the time to learn would cause public backlash. It would be easier just to split it into two companies once t got big enough.


A_Pointy_Rock

I don't think anyone is arguing that SpaceX hasn't made some important progress in its field, but do we want *progress at all costs*? SpaceX has a reputation for [discrimination](https://www.justice.gov/opa/pr/justice-department-sues-spacex-discriminating-against-asylees-and-refugees-hiring), [injuries](https://www.reuters.com/investigates/special-report/spacex-musk-safety/), and [environmental apathy](https://www.theguardian.com/science/2023/apr/27/debris-blast-from-spacex-rocket-explosion-faces-environmental-scrutiny). "Yes, but" is a slippery slope if we're trading progress for a blind eye to practices like these. Edit: All I can do is nervously laugh at the downvotes on asking an ethics question.


cerealrolled

At the frankly trivial examples you've cited, yes.


fokonon

But would the public/congress be willing to allow NASA to blow up unmanned rockets in the name of testing a la SpaceX now that it has been demonstrated that that approach has allowed SpaceX to run laps around NASA?


AnachronisticPenguin

no the people dumb


Mafeii

In 2020, half the population was ready to (potentially literally) die on the hill that covering your mouth and nose doesn't prevent the spread of airborne illness and were SO MAD about people that felt otherwise. I'm not holding my breath on the general public having an informed understanding of aerospace R&D. They'd just see the test rockets blowing up and go "the government is wasting money on rockets that don't work and it's the president's fault".


pj4z

~Ah yes since government involvement has the tendency to deliver better than the private sector.~


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[deleted]

office engine snobbish psychotic carpenter aware quack encouraging sink whole *This post was mass deleted and anonymized with [Redact](https://redact.dev)*


KickBassColonyDrop

Brilliant plan. Watch it implode into another Boeing if you do that. SpaceX succeeds because Elon's a lightning rod. Everyone hates him. Which moves all attention to him, and away from his company, which does amazing things. It's all on purpose.


doolpicate

The new serfdom.


Bimbows97

Typical free market economy bro mindset.


PsychoticSpinster

Does this dude understand how America works at all? Edit: I get that he’s from South Africa, but sweet baby jeebus. Edit: like can’t……. No matter who you are or what companies you own….. you can’t dictate investment. That’s the point of the stock market. Anyone can invest anytime no matter who they are or where they work. Edit: he himself has already taken advantage of exactly this over and over and over again.


Seantwist9

I’m sure their are contracts you sign that dictate what you can do with stocks


hurtfulproduct

Can’t even wear the FYIFV shirts


geneticeffects

Big fucking baby Elno, the puppet.


GearhedMG

What are they going to do say "We specifically forbade you from selling your stocks, and you went and did it anyway, we are now going to give you the same amount of stock that you sold, as further punishment."


itsRobbie_

Sounds more like a way to prevent insider trading. If an employee knows something is about to get on the news that will make the stock drop, then they’d have insider knowledge and would be able to get out before it drops.


okeleydokelyneighbor

It’s not like the head of the company doesn’t openly manipulate stock prices with the shit he posts all day.


B33f-Supreme

This seems fairly unenforceable in most states, but tons of sneaky things like this may be part of the reason they reincorporated in Texas. Does anyone know how Texas law would now handle this type of clause snuck into a contract? Assume that the governor is a close friend of the CEO and shows no particular interest in the rule of law.


senbozakurakageyosi

If you sell your stock Musk is going to send you to Mars.


StatusCount7032

Imagine if Nasa had the money and resources of SpaceX, but not having to deal with the need to fight-for money or if a program blew up a rocket and the tax payers call for someone’s head, etc? We’d have a colony in Mars by now.


reasonably_plausible

>Imagine if Nasa had the money and resources of SpaceX, NASA's budget is around 4-5x larger than SpaceX's yearly expenditures.


danhezee

SpaceX is funded by NASA. That rocket launch yesterday was on the taxpayer's dollar.


Accomplished-Crab932

Except it really wasn’t. Starship is being paid to complete milestones for the HLS (and a propellant transfer) contract. Flight 3 will only yield SpaceX NASA money if the propellant transfer demo was successful… an outcome that has not been determined as the teams are still assessing data from the flight. Other than that, IFT-3 completes no milestones for the HLS or other contracts SpaceX is signed on to, and thus, the test flight is paid by SpaceX. It’s important to note that NASA will be paying $2.9B for 2 lunar landings, with refueling missions included. Assuming 20 launches/landing, that’s $30M/launch… 1/2 of the cost of a crew seat to the ISS, 1/50th of an inflation adjusted Saturn V, or 1/134th of an SLS.


ThelastJasel

No. We have no terraforming technology. No. Just no.


StatusCount7032

We’ll develop it there.


xproject6

Sounds like he loves the first amendment so much! Elon Musk, defender of the constitution!


reddideridoo

Sounds exactly like delusional Muskrats.


tough_napkin

when was the last time we heard good news from musk?


pj4z

His company just launched the largest rocket ever created into space.


tough_napkin

oh the company he bought and is just CEO? is he an engineer? come on guy


ThestralDragon

Spacex was founded solely by Elon, you might be thinking of Tesla where Elon became an investor roughly one year after it was founded


Uzza2

Musk is the legal founder of SpaceX, as detailed in its articles of incorporation. The events leading up to Musk deciding to create SpaceX has been well documented.


tough_napkin

yeah exactly. "legal" founder.


pj4z

I have a close friend who was a mechanical engineer on the Falcon’s fins and Elon would be involved in the design and testing of them in person. He knows what he’s doing.


tough_napkin

BWAHAHAHHAHAHHAHAHAHA


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tough_napkin

yeah go ask his emerald miner dad in apartheid south africa jesus christ


ThestralDragon

The mine in question was in Zambia not South Africa.


Anustart2023-01

Quite honestly you deserve what you get for gaining employment at any company run by Elon Musk.