When Google went public, approximately 900 employees instantly became millionaires. Over time, thousands more people became millionaires.
Unfortunately, there is one very early Googler named Brian Reid who did not get to experience a financial bonanza when the company went public. Additionally, he did not become rich when the stock increased from $85 on the day of the IPO to $2,400 today.
Brian Reid served as Google’s first Director of Operations until Larry Page abruptly and unceremoniously sacked him. Tragically, he was fired only nine days before Google said it would go public. All of Brian’s Google alternatives were gone after he lost his job.
As you could expect, he was furious. Enraged enough to launch a bitter and lengthy lawsuit that dragged on for six years.
Getty Images/Justin Sullivan
Yes, there was a period before Google, all you Gen-Z readers.
After his PhD studies, Reid taught electrical engineering and computer science at Stanford as an associate professor. Then he entered the business world.
As a part of the organization that eventually became Adobe Systems, Brian was a member of the team that created the first Cisco router. He led the group that created the first Internet firewall in 1987 and built the first high-powered Internet search engine, AltaVista, in 1995.
Reid was clearly qualified for the position at Google, as you can see.
He was granted the opportunity to earn 119,000 Google shares at a strike price of $0.30 as part of his employment.
In layman’s terms, often when you join a startup and are given options, they aren’t fully yours to sell until a certain amount of time has passed, typically three years. Options are limitless in number. They might be yours permanently once they “vest” (become yours to purchase). Or there might be clauses in your employment contract that would allow the corporation to reclaim the options in the event of your dismissal or resignation.
For instance, at my first job out of college in Los Angeles, I was the third person hired. It was a new web video company. After working there for 7 years, I eventually received a share of the company’s overall stock worth about 1%. I was aware that I had 90 days to pay for my options when I left to manage CNW full-time in 2012. I can’t remember exactly how much this would have cost me, but it was probably close to $100,000, which was $98,000 more than I had on hand at the time. Before I left the company, they told me that they wouldn’t make me buy my shares at all, much less within 90 days. They abandoned me after my last day on the job. I never received any official documents to confirm that I wouldn’t be obliged to pay $100k within three months. So after 90 days passed, I suddenly lost ownership of 1% of this firm. It hurt a lot. That turned out to be a blessing in the end because those shares wouldn’t have been worth anything otherwise. At the moment, I was still enraged, and I remained resentful for years.
Brian Reid received just one performance evaluation from his manager Wayne Rosing during his tenure at Google. The evaluation was favorable. According to Rosing’s assessment of Reid, he possesses “an exceptionally broad breadth of knowledge about Operations, Engineering in general, and an aptitude and orientation towards operational and IT challenges.” Rosing noted that Reid “projected confidence when dealing with fast changing situations,” “had an excellent attitude about what ‘OPS’ and ‘Support’ mean,” and was “very intelligent,” “creative,” “a terrific problem solver,” and that the “vast majority of Ops ran great.” Reid’s performance was rated as “consistently meeting expectations” by Rosing.
Losing A Fortune
Larry Page, who was 30 at the time, abruptly fired Brian Reid in February 2004.
Reid was informed that he “did not fit into the culture.”
Brian Reid’s 119,000 stock options were returned to Google as part of his termination.
Had Brian been with the company just seven months later when Google went public in August 2004, he would have had the option to pay $0.30 for each of his 119,000 options. He would have spent $35,700 on that.
After the opening day of trading, Google’s share price was $85. So had he exercised his options at the IPO, Brian could have paid $35,700 for shares that would have been worth…
A graph of Google’s stock price since 2004 is shown below:
As you can see, Google’s share price has increased like skyrocketing.
So. If Brian Reid had been allowed to maintain his choices… and if he had been able to retain each and every share, his 119,000 shares would be worth…
Reid proceeded to sue Google in July 2004 for discrimination on the basis of age. It was a difficult case. The Santa Clara Superior Court issued a summary decision rejecting his claims three months later. This judgment was overturned on October 4, 2007 by the California Sixth District Court of Appeals. In 2010, the matter eventually went to trial.
Reid’s dismissal, according to Google, was not motivated by his advanced age. They bragged about their renowned nurturing and forward-thinking business culture. They stated that Google simply does not treat its employees in such a manner.
Reid claimed in court that while he was working for Google, Urs Holzle and other staff members made age-related slurs about him. Reid claimed that Holzle informed him his beliefs and thoughts were “obsolete” and “too old to matter.” He allegedly received comments like “slow,” “fuzzy,” “sluggish,” and “lethargic,” and was told that he “lacked vitality” and did not “show a feeling of urgency.” Reid claimed that every few weeks, Holze made remarks to Reid about his age. Other coworkers called Reid an “old man,” an “old guy,” and an “old fuddy-duddy,” told him his knowledge was ancient, and joked that Reid’s CD (compact disc) jewel case office placard should be an “LP” instead of a “CD.”
According to Brian’s attorney, the matter was resolved “to the mutual satisfaction of all parties.” The exact settlement amount was not released, but judging by his lawyer’s comment, one must assume it was generous. Even yet, we find it difficult to believe that the settlement came close to covering the cost of Brian Reid’s stock options today. Brutal!
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