Last week’s massive layoffs at Microsoft--and Xbox in particular--was terrible for all kinds of reasons. Careers were upended (or even ended) for the workers and couples and families and friendships involved, with lives thrown into turmoil and months or even years of work thrown in the bin. For the wider gaming public, it means Xbox will have less studios releasing fewer games.
As the dust has settled on the layoffs, we keep learning more and more about them, and the more we learn the more awful they become. Stuff like the number of veterans affected, some with more experience than many of you have lived years on this Earth. Or, as I discovered over the weekend, that Microsoft has (like many other gaming and tech companies) found new and innovative ways to fuck their workers over.
More and more companies around the world, but particularly in the United States, like to offer shares as a 'bonus' to their employees, an extension of their overall compensation. Come and work for us, this says, and keep working for us, and you'll be a part of the company not just on the timesheet but, in some small way, in terms of ownership as well. When it comes to companies like Microsoft, that can be a big deal; at time of posting, a single share in Xbox's parent company is worth $500.
There's a catch with these shares, though. They're usually unvested, which means that while you're kinda given them when you join, you don't actually get to sell them until they become vested stocks at a later time, often after years of service. It's commonly known as a pair of "golden handcuffs", with the technical term being RSUs, or Restricted Stock Units. And, surprising absolutely nobody, many of those affected by the Xbox layoffs last week had unvested shares.
So when they were laid off, they didn't get to keep those shares, or at least didn't get to keep most of them (sometimes workers are granted a certain percentage per year), a loss which in some cases (and depending on seniority and bonuses) could have been worth up to hundreds of thousands of dollars, if not more. Instead, all these shares go right back to Microsoft, where they can be sold off to millionaires, billionaires or redistributed to the company's senior leadership.
As someone who works for a co-op website, and who has previously only worked for a small media company and the NSW Government, last week I had very little knowledge about this concept, so how it affected laid-off employees never even occurred to me. Until I saw a Linkedin post by Noble Smith, who had worked on everything from Killer Instinct to Age of Empires at Xbox, and who shared his story of thinking he had enough Microsoft stock to afford to put his "kids through college", but ended up losing it all when he was laid off in 2023:
What happens to all of that unvested stock from the 9,000 people who were just laid off from Microsoft?
Well, the corporation gets to take it back.
Poof! Like a conjuror's trick. That promised payment for all your hard work is gone.
Xbox doesn't pay royalties to people who work on its games. Executives like Matt Booty tell Xbox workers in company meetings (whenever he is asked if Xbox will someday pay out royalties) that your royalty equivalents are the stock shares that you are granted at your signing and any stock shares granted as bonuses.
Great health insurance and the promise of yearly stock vesting: The twin rings in the Microsoft golden handcuffs. But when you're laid off that stock is as insubstantial as a dream. (And once your COBRA runs out, that amazing healthcare is an apparition too.)
I lost a small amount of unvested stock when I was laid off from Xbox in 2023. Small by normal standards. But enough to put my kids through college. With Microsoft stock at an all-time high, even a measly 10 shares is worth close to five thousand dollars. A lot of people who got laid off each had hundreds if not thousands of unvested shares.
And now Microsoft gets to reabsorb all of that vast wealth. Hundreds of millions of dollars? Billions?
Their coffers runneth over.
"Microsoft actually did a great job letting you know exactly how many shares were granted, vested and unvested", Smith explained in a conversation with me. "That said, one of the most aggravating things about working there was the constant dangling carrot of those unvested shares. People might think that Microsoft just gives out heaps of stock to employees. Nope. Only if you’re at the executive level. The rest of us grunts had to work HARD to earn our shares. If the annual review cycle came along and you didn’t earn a stock award that year it was crushing."
"People at Microsoft look at their vesting schedules a lot!", he adds. "Those shares are your kids’ college tuition, or part of your retirement nest egg, or maybe even a down payment on a house. And it hurts when you get laid off with unvested shares that you had earned…but weren’t given enough time as an employee to finally receive."
I shared Smith's story on social media because the concept blew my socks clean off, and have since heard from many other former Xbox employees, employees of Xbox-owned studios and workers from other major video game companies that stuff like this is pretty common in the AAA space.
An employee at Bethesda, for example, says that despite the company being bought by Microsoft over four years ago, their promised shares are only just now materialising, and aren't even being given at all. Workers can purchase shares for a 10% discount, but then have to pay tax on them, which in the end works out to be a pretty bum deal.
Former workers at Bungie and EA (and EA-owned studios like Bioware) tell me they were also promised shares upon starting in their jobs, but upon being laid off--sometimes after years of employment--these had yet to vest, meaning they ended up worthless.
This is bullshit! To promise some ethereal form of compensation then so routinely (and cruelly) have it disappear in a puff of smoke leaving employees with nothing, sounds to someone from outside the US like it should be illegal. Especially since those shares just revert back to the company and ultimately end up in the hands of those who have, in some way (whether as an executive or a shareholder), contributed to the layoffs in the first place!
UPDATE: To be doubly clear here, I realise this whole concept is complicated and varies from job-to-job, let alone company-to-company. This story is not about people who have been rewarded handsomely for decades-long tenures at other companies, nor is it about people who have forfeited their shares because they willingly left their employer. It's about people who have been laid off from Xbox, meaning they've forfeited either a percentage or all of their compensatory/bonus shares against their wishes, which I think is wrong!
