zlacker

>>fnbr+(OP)
So part of their compensation for working is equity, and when they leave thay have to sign an additional agreement in order to keep their previously earned compensation? How is this legal? Mine as well tell them they have to give all their money back too.

What's the consideration for this contract?

>>Button+7J
> What's the consideration for this contract?

Consideration is almost meaningless as an obstacle here. They can give the other party a peppercorn, and that would be enough to count as consideration.

https://en.wikipedia.org/wiki/Peppercorn_(law)

There might be other legal challenges here, but 'consideration' is unlikely to be one of them. Unless OpenAI has idiots for lawyers.

>>eru+PL
Right, but the employee would be able to refuse the consideration, and thus the contract, and the state of affairs wouldn't change. They would be free to say whatever they wanted.

>>verve_+tQ
If they refuse the contract then they lose out on their options vesting. Basically, OpenAI's contracts work like this:

Employment Contract the First:

We are paying you (WAGE) for your labor. In addition you also will be paid (OPTIONS) that, after a vesting period, will pay you a lot of money. If you terminate this employment your options are null and void unless you sign Employment Contract the Second.

Employment Contract the Second:

You agree to shut the fuck up about everything you saw at OpenAI until the end of time and we agree to pay out your options.

Both of these have consideration and as far as I'm aware there's nothing in contract law that requires contracts to be completely self-contained and immutable. If two parties agree to change the deal, then the deal can change. The problem is that OpenAI's agreements are specifically designed to put one counterparty at a disadvantage so that they have to sign the second agreement later.

There is an escape valve in contract law for "nobody would sign this" kinds of clauses, but I'm not sure how you'd use it. The legal term of art that you would allege is that the second contract is "unconscionable". But the standard of what counts as unconscionable in contract law is extremely high, because otherwise people would wriggle out of contracts the moment that what seemed like favorable terms turned unfavorable. Contract law doesn't care if the deal is fair (that's the FTC's job), it cares about whether or not the deal was agreed to.

>>kmeist+n11
If say that you were working at Reddit for quite a number of years and all your original options had vested and you had exercised them, then since Reddit went public you would now easily be able to sell your stocks, or keep them if you want. So then you wouldn’t need to sign the second contract. Unless of course you had gotten new options that hadn’t vested yet.

>>hmotte+Od1
My understanding is as soon as you exercise your options you own them, and the company can’t take them from you.

Can anyone confirm this?

>>p1esk+Wc2
With private stocks, they can put further restrictions on what you can do with your stocks.

>>eru+BP2
Sure, but in the event of liquidity, can they refuse to pay me the value of my shares? For any reason?

>>p1esk+cR2
If they have even moderately clever lawyers and accountants, yes.

See eg https://en.wikipedia.org/wiki/Shareholder_rights_plan also known as a 'Poison Pill' to give you inspiration for one example.