Gar­riott: NC­soft fired me, cost me mil­lions

In law­suit, game en­tre­pre­neur claims com­pany forced him to ex­er­cise stock op­tions too soon

Austin American-Statesman - - BUSINESS & PERSONAL FINANCE - By Kirk Laden­dorf AMER­I­CAN-STATES­MAN STAFF

On­line game pi­o­neer Richard Gar­riott tes­ti­fied Tues­day that he was fired and did not vol­un­tar­ily re­sign from his job as a high-level game pro­ducer for South Korea’s NC­soft Corp. in Novem­ber 2008.

But when it came time to de­ter­mine how his mil­lions of dol­lars in stock op­tions would be treated, he said, he was told his de­par­ture would be con­sid­ered a vol­un­tary res­ig­na­tion.

That dif­fer­ence, Gar­riott main­tains, cost him $47 mil­lion in lost prof­its when he was forced to ex­er­cise his NC­soft stock op­tions at the bot­tom of a weak stock mar­ket.

That is at the heart of Gar­riott’s law­suit against NC­soft, which is be­ing tried this week in U.S. District Court in Austin. Be­ing fired would mean that he had up to 10 years to ex­er­cise his op­tions for more than 400,000 shares of com­pany stock. But leav­ing vol­un­tar­ily gave him just weeks to act be­fore los­ing the op­tions.

Gar­riott said he learned he no longer had a job with NC­soft on Nov. 6, 2008, when he was in Rus­sia re­cov­er­ing from his trip to the In­ter­na­tional Space Sta­tion. Gar­riott had bor­rowed money against his NC­soft op­tions for his $20 mil­lion ride in space.

He said Chris Chung, the head of the com­pany’s North Amer­i­can sub­sidiary, called him in Rus­sia to tell him “that my time at NC­soft was over.”

Gar­riott ac­knowl­edged that Chung did not use the words “fired” or “ter­mi­nated.”

“I did not quit,” Gar­riott said. He later was told by a com­pany hu­man re­sources di­rec­tor that he was part of an in­vol­un­tary re­duc-

tion in force — a lay­off, in other words. Gar­riott said he pressed NC­soft for a writ­ten clar­i­fi­ca­tion on the treat­ment of his stock op­tions. In­stead, Gar­riott was told by let­ter in De­cem­ber 2008 that his de­par­ture was be­ing treated as a vol­un­tary res­ig­na­tion.

Gar­riott bor­rowed more than $9 mil­lion to ex­er­cise the op­tions. He sold the stock for $20.7 mil­lion in Fe­bru­ary 2009. He main­tains that he would have made much more if the com­pany had not limited the time in which he could ex­er­cise his op­tions.

Gar­riott’s brother Robert, who also was an ex­ec­u­tive at NC­soft and a for­mer board mem­ber, also tes­ti­fied Tues­day. He said he talked with Chung and his brother in Novem­ber 2008. Al­though nei­ther used the word “fired,” Robert Gar­riott said, his knowl­edge of the com­pany told him im­me­di­ately that his brother had be e n ter­mi­nated.

“ I t wa s ob­vi­ous,” Robert Gar­riott said. He said he ad­vised his brother and NC­soft to pay care­ful at­ten­tion to the han­dling of the op­tions.

Richard Gar­riott tes­ti­fies that he was in Rus­sia re­cov­er­ing from space flight in 200 when ex­ec­u­tives called to tell him that his ‘time at NC­soft was over.’

Robert Gar­riott

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