Give us our stock back! That’s essentially what Zynga is telling some of its employees as it prepares to take its brand to the public markets.
Zynga issued shares in the company as a substitute for higher salaries as it sought to attract young developer talent — and it worked. The social gaming company is now an online phenomenon with popular games like Mafia Wars, CityVille and FarmVille.
Given a report in The Wall Street Journal, however, it seems Zynga’s founders are looking to renege on their stock offer now that the company is worth billions and planning to to do an initial public offering of its shares. With Groupon’s wild success in the public markets, Zynga CEO Mark Pincus may be giving second thoughts to those stock distributions.
Cough It Up
“Early last year, as Mr. Pincus began preparing to take Zynga public, he and several other executives decided the company had doled out too many stock rights to certain people in its early days, say people familiar with the matter,” the Journal reported. “The executives chose an unusual solution: They began demanding that certain employees surrender some shares or be fired.”
Some analysts are putting a $ 20 billion value on Zynga. Early employees who labored to make the company a success and hold significant shares could become rich overnight in an IPO. Zynga moved last year to compile a list of Zynga employees whose “performance might not justify their large grants of restricted shares,” according to the Journal. Zynga could not immediately be reached for comment, and the Journal reports Zynga would not make Pincus available to comment.
Charles King, principal analyst at Pund-IT, called the move culturally distasteful from the standpoint of Silicon Valley. He points to the common start-up practice of provisioning company shares to early-stage workers as a bonus or incentive…
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