One question is: is he able to complete his normal work tasks during the time his doesn't spend on his side projects?
If there is some thought that a side project might be relevant to the Enterprise then that gets discussed and agreed to before the work gets done. Outside of that: coding on "whatever" is about as desirable as reading the paper, watching Netflix, playing WoW, or sleeping in the bathroom during work hours...
If I'm paying for X hours a day and assigned tasks are done in less time, either I shouldn't be paying for the leisure or more bandwidth should be available to process more tasks. I do support building leaders at the office. I could never support subsidizing random startups out of my wallet with no equity or oversight. That's a mild form of theft and should be treated as such.
What kind of message does this send to the rest of the crew? What kind of morale will be created when someone is working in fifth gear on deadline while also watching their office mate flush away half the day?
Not to mention: tooling around at the office on non-work things to the point team members are complaining to their manager about the situation? Yeeaaaaahhhhh... I dunno what planet the "promote him!" commenters on the article live in, but someone needs a stern talking to with a clear eye to defending their continued employment. It's a great excuse for management to make a cultural statement.
And technically, they're right. If you aren't agreeing to that, you should find another job. But who would do that? Instead, as the answers on Quora say, people provide the value they think they've been paid for, and then use the rest of their time for their own things.
I have ethical issues with this, in case that wasn't clear. But everyone has issues with not getting paid what they're worth.
My salary is seriously low if technically they've paid for an entire year of my time!