Is story on how Skype employees stock options end up being worthless on acquisition common or not?

This is shocking, and as far as I know, very unusual.

Look into the key paragraph in the stock options agreement. It comes on page 3, and up to that point, everything looks like a boilerplate stock-options agreement:

1. Participant Acknowledgment and Management Partnership.

The Participant hereby acknowledges receipt of a copy of the Plan. The Participant hereby acknowledges that all decisions, determinations and interpretations of the Board in respect of the Plan, this Agreement and the Option shall be final and conclusive. The Participant further acknowledges that, prior to an Initial Public Offering, the Company shall issue the Ordinary Shares acquired pursuant to the exercise of the Option to the Management Partnership on behalf of the Participant and no Ordinary Shares shall be issued to or recorded in the name of the Participant. No Ordinary Shares shall be issued to the Management Partnership on behalf of any Participant unless and until the Management Partnership takes or causes to be taken all such reasonable actions as may be necessary or reasonably desirable in order to become a shareholder in the Company ...

I hate it when a contract mentions something (the management partnership) with no prior definition or explanation. If you only read this stock-options agreement, you have no clue what this partnership is.

The two other signs that something was potentially risky: Skype is not a Delaware company (warning sign #1) and these are non-qualified stock options, rather than ISO, meaning they can have weird clauses. Indeed they did!