So I was typing up a response when too many things didn't make sense to me in the notes and especially articles by gaming sites. I resolved to read the actual final ruling instead.
I held equity in past companies I worked for so I quickly understood what was going on.
Summary for some of you out there:
1. Marty O'Donnell (henceforth MOD) was possibly entitled to one year's base salary at termination base salary of $165,000. Bungie and MOD settled this out-of-court (see pg. 24, IV., 1)
2. MOD had two types of equity in Bungie, Class-B shares and Common Stock. They would all eventually become Common Stock after the release of the first Destiny game. All shares had to
vest over a schedule, so when a person first receives shares or options, it's usually unvested and you can easily lose it under a few conditions. If the shares/options are vested, they now belong to you.
In law, vesting is to give an immediately secured right of present or future deployment. One has a vested right to an asset that cannot be taken away by any third party, even though one may not yet possess the asset.
Marty's could vest in 3 situations; (a) each release of the 5 Destiny games would vest 20% each, (b) if Bungie were bought by a company all shares would vest immediately, and (c) if the employee resigns for "Good Reason" or is terminated without cause after the first retail release date of the first Destiny game, 50% of the
unvested shares would vest immediately.
3. MOD could participate in profit sharing depending on how well Destiny performed. He had some profit sharing points allocated to him, and how much he got would depend on the total pool size for the profits and how much points he had compared to others.
What happened was, the arbitrator judged that Bungie accelerated its termination of MOD to be as far apart from the Destiny release as possible so it would weaken MOD's claims on stock and profit share.
Bungie could have opted to give MOD the 20% that would vest upon Destiny's September release, or extended his termination to after the first release which would have given him even more stock (specifically, 60% of his total unvested stock).
The arbitrator basically considered a few things; Bungie's decision to fire and recover all stock, what MOD did that pissed Bungie off, MOD's contribution to Bungie over the years.. and decided that Bungie was being unfair to MOD. And thus, although strictly speaking Bungie did not do anything illegal, the arbitrator ruled in favor of MOD.
MOD finally elected to take what I described in 2.(c), 50% of unvested shares vesting immediately upon termination without cause, which is a total of 192,000 shares. He also won $140,000 in profit share that's due in payment to him this month.
All in all, I now understand why Bungie did this.. because strictly legally speaking, what they did was within legal boundaries. They thought it was black and white. Unfortunately, law is dispensed by human beings and the arbitrator can exercise judgment "in good faith and fair dealing".. and MOD won. I do think it's a fair ruling.
