When Uber laid off 7,000 people in May, it included an extra payment to some employees who were about to qualify for a tranche of stock to vest.
Employees who would have gotten the stock within three months had they not been laid off were paid about $27 a share for the stock instead, multiple sources tell us.
Some employees are not happy about this extra payment because the stock was worth more than that at the point of the layoff.
They thought Uber should have paid a more current price for the stock, or given them the option to keep the shares.
An attorney who specializes in employe stock compensation says it doesn’t work that way. If the stock hasn’t vested, in most cases, employees likely aren’t entitled to anything.
Visit Business Insider’s homepage for more stories.
By nearly all accounts, when Uber laid off 7,000 people in May, the severance package it gave employees was a generous one: at least 10 weeks of pay, health care until year’s end and other benefits.
For instance, Uber paid employees an extra lump sum if they were about to have a tranche of restricted-stock units vest within three months had they not been terminated, as long they signed waivers and non-disparagement agreements.
Tech companies like Uber include stock compensation as part of an employee’s total pay package. Often the amount of stock is negotiated when an employee first joins the company. An employee may even take less cash salary and more stock, which then vests over a number of years, typically four. So as employees contribute to the company’s overall success and the stock price rises, employees can earn more on the stock than on their other pay.
Dozens of employees qualified for this extra payment, according to an analysis of the public list of laid-off employees, and possibly more people qualified than we could find on the list, because participation on that list is voluntary, and doesn’t include all the people who were laid off.
Uber paid these employees about $27 for each share of stock.
Yet some employees were not happy about this payment because of the method Uber used to come up with the $27/share price.
Uber calculated the average price across the month of April, a point in time when COVID-19 had ransacking the travel industry and the stock was down but starting to inch back up. Uber conducted the layoffs in May and left everyone on the formal payroll for a month, until June 17, source say, aka four weeks of garden pay.
If it had used May’s average share price, or even the days before employees were formally off the payroll, those employees would have be paid about $32 a share.
For some people who were due to have a large tranche vest, those couple of bucks per share added up to thousands of dollars, one person told us.
“Due to pandemic, the entire stock market sold off in March and April, so that was an artificially deflated value. They are choosing a value …read more
Source:: Business Insider