Rumor: Former Renren Games Employees to Sue over Stock Option Rights
Sina, 5/16/16
Former employees of Renren Games, the online and mobile game development and operations division of Chinese social networking site operator Renren Inc (NYSE: RENN), are reportedly preparing to sue Renren Games and Renren Inc over stock option rights that were allegedly cancelled during Renren's sale of the Renren Games division to a privatization consortium led by Renren Games CEO He Chuan, according to a senior-level source at Renren Games.
Renren announced in its Q4 2015 earnings report today that the company had approved the disposition of Renren Games on November 19, 2015, which was subsequently completed in March 2016.
According to a source close to the matter, stock option rights were cancelled for 138 former employees during the privatization process, with their combined stock rights amounting to a 15% stake in Renren Games.
A former Renren Games employee said that according to relevant contract provisions, employees employed as of January 1, 2014 were given stock option rights that could be exercised in the event of a future market listing. When employees with mature option rights left the company, they each signed an agreement confirming that their mature stock option rights would be retained and that in the event of a future IPO they would have the opportunity to exercise their options and convert the rights into a corresponding quantity of Renren Games stock. As of the end of 2014 nearly all of the employees with mature option rights had left the company.
The same former Renren Games employee said that an employee representative had spoken with He Chuan and James Jian, CEO of Renren, but had not obtained a satisfactory response. Renren Games and Renren Inc have declined to comment on these rumors.
Keywords: online gaming He Chuan Internet Renren stock option RENN litigation James Liu Jian law HR M&A spin-off
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