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.
