Jeff Bezos’ Blue Origin has reportedly introduced a new equity scheme for its employees that includes an unusual non-compete clause.
The new equity scheme was created in response to internal criticism of the company’s previous stock option plan. The plan now includes a clause that requires employees to forfeit all their stock options if they join a competitor such as Space Exploration Technologies Corp. (NASDAQ:SPCX) within 18 months of leaving Blue Origin, reported Business Insider.
The clause does not apply to employees in California and Washington due to strict laws against non-competes. However, it still impacts a significant portion of the company’s workforce, primarily based in Florida, Texas, and Alabama.
Two former SpaceX employees who later joined Blue Origin told Business Insider that their SpaceX stock option agreements did not contain non-compete clauses.
Meanwhile, Scholar Financial Advising associate financial advisor Evan Mills told Fortune that the clause effectively creates “golden handcuffs,” forcing employees to choose between retaining valuable equity and leaving for a competitor. He noted that because the stock is conditional rather than just illiquid, employees who join a rival could lose both vested and unvested equity, sacrificing potentially significant upside.
Blue Origin did not immediately respond to Benzinga’s request for comments.
Blue Origin Employees Disappointed
This non-compete clause, which is not common in fast-growing private startups, has raised eyebrows among employment attorneys and wealth managers. It also presents a dilemma for Blue Origin employees, as they risk losing all their gains if they decide to leave for a competitor.
In June, SpaceX’s valuation surpassed $2 trillion, creating millionaires across the company. However, former Blue Origin employees expressed disappointment over the company’s unusual equity approach. The stock options program at Blue Origin only promised a payout if the company went public or was sold, and these options expired if these events did not occur within a decade.
Bezos Takes on Musk
Earlier this month, Blue Origin sought to raise $10 billion at a $130 billion valuation. The company has already received a $4 billion commitment from Coatue Management, a hedge fund specializing in tech-related investments. Jeff Bezos will contribute $2 billion in Blue Origin’s latest funding round, with an additional $4 billion expected from large institutional investors.
Jeff Bezos’ companies are stepping up competition with Elon Musk’s ventures not only in space technology but also in Tesla Inc.‘s (NASDAQ:TSLA) autonomous vehicles vision. In June, Amazon.com Inc. (NASDAQ:AMZN)-owned Zoox unveiled an updated Robotaxi featuring improved passenger comfort, a better touchscreen, and an enhanced two-way audio system, while retaining the same hardware design. Zoox said it can now produce more than 100 Robotaxi units. Meanwhile, Bezos-owned Blue Origin showcased new technology designed to support future Mars missions.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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