Legal Question in Business Law in California

Re: Contesting expired stock option award - next steps?

A lot is going to depend on whether you were provided with any written notice or documentation detailing the date upon which your options would expire. Was there anything of that sort given to you? If not, is there a company manual governing their policies regarding stock options of these kinds? Whether or not you have legal recourse is really going to turn on these questions.

Re: Contesting expired stock option award - next steps?

You will need to provide more information. For instance, were you given the stock option in writing? If so, did the document have the date for expiration of the option? Or, did your former employer simply decide that the option expired upon your no longer working there.

In other words, who is deciding the date for expiration of the options and when are they deciding?

Caleb Donner

Re: Contesting expired stock option award - next steps?

A stock option plan at all but the smallest companies is going to be in writing, and will have been carefully drafted and reviewed by the corporation's inside and outside counsel and its tax accountants. Option plans are quite formal arrangements. Further, as a participant, it would be highly unusual if you had not been furnished with a copy of the plan, in writing, and possibly you were asked to sign an acknowledgment of receipt. Further, you very likely made elections such as your level of participation, and those would bear your signature or initials. Now, I hasten to add, in some companies, especially where everyone is an insider, an option plan could be informal, or even unwritten, but even then it would be foolish not to have the plan in writing and reviewed for tax and other legal consequences.

So, whatever's in the writings is going to control. Possibly the writing may require professional interpretation, if the terms are hazy or overly-legalistic.

So, whether you have a legitimate beef with the company will depend on what the written plan says. There are a couple of other factors to consider, however; whether the employee who misinformed you did this on her own, and if so whether it was an innocent, negligent or willful misrepresentation; or whether possibly the company (i.e. a high-up officer) told her to misinform you.

If it were an innocent or negligent misrepresentation, I'd guess you're still out of luck. If you could prove intentional misrepresentation on the part of the employee, you'd have a decent tort action against her; and if the company itself participated in a deliberate misrep., and you could prove it, you would have a very strong case against both, based on fraud and conspiracy theories. However, my overall feeling is that you made a mistake in not relying on the written plan and you'll have little chance of recourse against the company or the misinformant.

Re: Contesting expired stock option award - next steps?

"He said - She said" discussions are essentially irrelevant. What matters are the actual terms as defined in the company's stock plans. Get the plan paperwork, and determine if you are entitled to the options after leaving [probably not]. If you were negligent in not checking this out before leaving, you will have a tough time succeeding in a claim that you were misled, but if you can somehow prove that, you have a chance of showing fraud. Any legal action you take would be in the form of a Federal lawsuit, being over ERISA benefits. Feel free to contact me if you actually think you can show what is required for such suit.