So, while Elon Musk is an asshole, and these terms are awful, there is more to it:
They involve stock awards, which are given by the company to the employee. They can either be options (which give you a choice to buy at a certain price, and presumably you wouldn’t do that unless you can sell for higher price), or outright stock grants . They are given as part of compensation, and vest on a set timetable. (So, if someone was given 1000 shares, the employee would still see 1000 shares in some account, but they may only be able to access 100 of them every six months).
Then, the other wrinkle is that SpaceX is a private company. That means that employees can’t just go sell their shares on the open market. So SpaceX graciously offers to buy back these private shares at whatever they think they are worth at the time. While this sounds fishy, the only other real alternative is for the employees to hold on to the shares and sell them if they go public…
… However, simply receiving the shares when they vest is a taxable event. So if SpaceX didn’t offer some way for mere mortals to turn their shares to cash, then in effect they would be saddling them with an enormous tax burden and no way to raise the cash to pay it. So they king of have to do it this way.
Do they really need to confiscate an employees shares if they hurt Elon’s fee-fees? Of course not. But that’s the only dumb bit here. The rest is pretty standard for a private company who attracts workers with stock benefits.
Ephera@lemmy.ml 8 months ago
Sounds to me like the scam is to attract workers with stock benefits.
dhork@lemmy.world 8 months ago
In public companies, it’s not really a scam. It’s a legitimate tool for these companies to get and keep the key people they need. The stock benefits are over and above their salary, after all, and equate to real money.
It’s the startups and private companies where this all gets a bit scammy, because there is no liquid market for these shares. And those companies are more likely to offer extra stock instead of a competitive salary, but that stock may not be able to be cashed out until the company goes public, forcing the employees to stay until the IPO, unless they give up that theoretical big payday.
Argonne@lemmy.world 7 months ago
As long as you exercise all the stock they give you one way or another, you can leave whenever you like. The real scammy part that no one seems to mention is to give really long vesting periods
Chocrates@lemmy.world 7 months ago
It is part of the calculus of employment. You get these shares and you deem if they are worth something (you think the company is complatently run and will IPO) or you think they are worthless.
You can talk about how pointless and probably predatory that is, but that is the current system we inhabit.
Fwiw I walked away from imaginary shares. My public company went private by a hedge fund. Honestly hedge funds are good at making short term cash so maybe that was a bad decision, but I wanted no part in the next year or more of layoffs. Plus my imaginary stock was still on a vest cycle so it would vest probably after the stock was skyrocketing.