Ex-Employee Loses Case Charging DoubleClick Should Have Fully Vested His Options

Nikolay Butvin, a former employee of DoubleClick, sued the company for fraud on the grounds that it had promised him 13,000 shares to come work there, but that he was only able to exercise 25% of them because he was not fully vested when terminated. In Butvin v. DoubleClick Inc. (S.D.N.Y. No. 99 Civ. 4727 (JFK), 3/5/01), a US District Court for the Southern District of New York ruled that Butvin should have been aware of the vesting provisions in the plan and thus could not receive legal protection.

Butvin went to work for DoubleClick in 1996 as a software engineer. He was offered options on 13,000 shares, and said that offer was part of why he joined the company. Butvin claimed he received no documents concerning his options until May 1997 when 25% of his options vested. Seven months after that, he was fired, just before DoubleClick went public. Butvin said he signed his option agreement in May of 1997. The agreement specified that if his employment were terminated without "good cause" he could exercise his options within three months of termination. Butvin claimed that he interpreted this to mean that all his options would vest in that event. However, the plan governing the options stated that the options vested at 25% per year over four years. The agreement letter stated that options were governed by the plan. Butvin said he knew about the references to the plan, but was told by DoubleClick officials that the plan actually did not exist, so he never found out what was in it. Based on this, he said the company had defrauded him by not providing him with all his options.

The court ruled that even assuming that he was right in describing the representations of DoubleClick officials, the fact that he signed an agreement that made specific reference to the plan documents meant that he was responsible for whatever was in them. Therefore, it denied his claim.