A lot of startup employees end up with worthless or almost worthless equity when their companies sell for peanuts. For the executives running those fading startups, there’s often a tricky balancing act between making their workers feel hopeful about the payoffs that could lie ahead and preparing them for the probability of disappointment.
Fuze, a struggling Zoom Video Communications wannabe, gave employees hope that they might still make money from their equity in the startup. Instead, an acquisition late last year left them with worthless stock options, while executives got big bonuses.
Executives leaned into giving workers hope in ways that went beyond what struggling startups typically do. Robert James, a managing director at compensation consulting firm Pearl Meyer who works with private and newly public companies, said he had never seen a firm award or reprice options so soon before selling itself in a deal that made those options worthless—as Fuze did.
“That would be unusual,” James said.