Part of that was already taken care of. As a San Francisco-area high-tech firm, Whole Earth Networks had offered stock options to its employees. The stock wasn't publically traded, so the options were basically worthless. However, if management wants to incent employees to stay until a sale is complete, it can offer an "accelerator" on options. Normally, stock options vest over 3-5 years, meaning that each month, some more of your stock option becomes available for you to buy. Since stock in a company that isn't traded on a public exchange isn't worth anything, most people don't buy their vested options, though, so even though they could own the stock, they don't.
With an accelerator in place, what happens is that on a sale, your option vests 100% and you can buy it on the spot. Since selling the company usually means selling all of the stock in the company, the buyer agrees that they will buy the employees' stock as well as the owners', so the employees get to "flip" their option immediately - buying it from the old owner and selling it to the new one. The employees then pocket the difference between their option price and the sale price.
This sort of accelerator acts as a strong incentive for employees to stay on until the sale, because if you are not employed as of the official closing date, you don't get to participate. However, this doesn't do anything to get people to stay around after the date of the sale. Even in the best of cases in any sort of buyout, things get shaken up and people become afraid for their jobs, so Kevin offered a second level of incentive to key employees. The key staff of Whole Earth was given an employment contract that said that for six months after a sale, if they were laid off or they had a substantial reduction in their responsibilities (an "effective termination," where they had their job duties taken away but they weren't actually fired), they would get a severance package of six months' pay.
By addressing these various issues, Kevin had taken Whole Earth from, frankly, a pig in a poke, to being a saleable property. It was still substantially a 5 million dollar per year regional ISP, but at least it was healthy instead of sickly, and it had something that looked like a potential future.
These cleanup activities had been taking place in parallel with the search for a buyer. There were any number of inquiries, but the company that finally took the bait was GST Telecom of Vancouver, Washington.
Excerpted from http://www.satanic.org/gst/ Real Press on the GST Buyout of Whole Earth Networks There's been rumours that GST is buying WENET, the Bay Area ISP which is made up of Hooked Inc. and the WELL's Internet branch. Well, they're true. They're gonna fuck over some other poor bastards, just like we were. Read all about it. Eric reports: word from the inside is that things are already getting fucked beyond belief. The recent loss of key technical people signals the beginning of yet another exodus away from a once great community ISP. One short-terming staffer's suggestion for naked Twister at the "team-building company picnic" was met with censure and disapproval. In another painfully ironic twist, the "internal communications director" of the tech staff sends out all email in Microsoft Word attachments... which no one on the technical staff can read in their UNIX mail clients. More to come... [6/19/98] Good luck to all the WENET employees and customers. Satan knows, you're gonna need it.Posted by scott at January 24, 2006 04:00 PM