Palantir Seeks To Muzzle Former Employees
Mr. Muggles / Via Flickr: muggles
Palantir Technologies is using a stock purchase offer to keep former employees on a tight leash.
The Silicon Valley data-analysis company, which recently said it would buy up to $225 million of its own common stock from current and former staff, has attached some serious strings to the offer. It is requiring former employees who want to sell their shares to renew their non-disclosure agreements, agree not to poach Palantir employees for 12 months, and promise not to sue the company or its executives, a confidential contract reviewed by BuzzFeed News shows.
The terms also dictate how former staff can talk to the press. If they get any inquiries about Palantir from reporters, the contract says, they must immediately notify Palantir and then email the company a copy of the inquiry within three business days.
These provisions, which haven't previously been reported, show one way Palantir stands to benefit from the stock purchase offer, known as a "liquidity event." Pay at Palantir is weighted heavily toward stock options, meaning current and former employees own a lot of equity, but these shares are not publicly traded and can be tricky to sell. Until recently, Palantir capped salaries at levels far below what top engineers could command at other Silicon Valley companies.
The deadline to agree to sell shares in the offer was Friday, four weeks after Palantir announced it internally, BuzzFeed News reported last month. Employees were invited to sell 12.5% of their equity, or $500,000 worth, whichever was lower. While former employees could also sell shares through outside brokers, Palantir offered a price that was above where some large investors valued their preferred shares. The company also said it might introduce policies to discourage share sales done outside of its official channels.
Palantir extended the share purchase offer to "certain" former employees, the contract says, suggesting that not all former employees were eligible. The contract doesn't elaborate on the eligibility criteria for former employees.
The liquidity event is part of an effort by Palantir — which, with a $20 billion valuation, is the third most highly valued American tech startup, behind only Uber and Airbnb — to address unease among its staff. More than 100 employees, or 5.8% of the total, left Palantir this year through mid-April, BuzzFeed News reported recently.
On April 22, after "conversations with our people around the world," Palantir CEO Alex Karp announced a sweeping 20% pay raise for employees who had worked there for at least 18 months, according to the BuzzFeed News report, which provided an unprecedented look at Palantir's inner workings. Palantir is 12 years old and has avoided an initial public offering, making some staff anxious over the prospect of turning their shares into cash.
"We understand the need for liquidity," Karp told staff in April.
On the surface, it might seem puzzling that Palantir would want to be doing favors for people who have left the company. But the contractual provisions reviewed by BuzzFeed News provide a fuller picture — every contract, in theory, entails a benefit to both sides — and help explain why Palantir was willing to extend former employees the offer.
More broadly, the provisions, contained in a special agreement at the end of the contract, show how privately held companies can pull levers that aren't available to their publicly traded counterparts.
Former employees who want to sell shares, the agreement says, have to release Palantir and its current and former executives, directors, employees, and shareholders from any claims of damages, and to agree not to sue over such claims, whether "presently known or unknown, suspected or unsuspected." The provision covers any past issue, including, for example, the former employee's termination from Palantir.
For any dispute about the agreement itself, former employees have to waive their right to a jury trial and agree to resolve the matter through binding arbitration, the agreement says.
Moreover, the agreement includes provisions that might be found in a severance agreement — even for former employees who haven't worked at Palantir in a long time.
For 12 months after the liquidity event, the agreement says, the former employees who sell shares must agree not to "directly or indirectly" solicit or recruit any Palantir employee. Further, it requires them to agree that this non-poaching restraint is "reasonable to protect the company's legitimate business interests and not unduly harsh or oppressive."
The agreement also takes steps to keep former employees quiet. It requires them to refrain from disclosing Palantir's "trade secrets and/or confidential and proprietary information," and to continue to be bound by any non-disclosure agreements they signed when they worked at Palantir or after they left.
Former employees can't make any public statement — "or statement likely to become public (including without limitation, via online, print, television or radio media or social media or online forums)" — that reveals any confidential information about Palantir or its executives and directors, except with written approval from Palantir's media relations team, the agreement says.
And what if a reporter gets in touch to ask a question about Palantir? Former employees must "immediately notify media@palantir.com via email," and then "furnish to media@palantir.com, within three (3) business days of its receipt, a copy of such request or inquiry."
The agreement itself has to be kept secret, too.
"Participant agrees to maintain in complete confidence the existence of this agreement," it says. Former employees may discuss the liquidity event with their spouses and attorneys, but "must prevent disclosure of any liquidity event information to all other third parties."
A Palantir spokesperson did not respond to requests for comment.
via BuzzFeed - Tech http://ift.tt/28QAfAs
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