Social Gaming Company Zynga is Thinking of Asking Employees to Give Back Stock

By Ashok Bindra November 11, 2011

To attract young developer talent, social gaming company Zynga offered company shares as a substitute for higher salaries. It worked. And social gaming company is now an online phenomenon with popular games like Mafia Wars, CityVille and FarmVille, according to Yahoo! News. This report first appeared on the Newsfactor.com site.

Now, the company wants that stock back from some of its employees. “That's essentially what Zynga is telling some of its employees as it prepares to take its brand to the public markets,” wrote Newsfactor.com reporter Jennifer LeClaire.

Since the company is worth billions and is planning to do an initial public offering of its shares, Zynga founders are having a second though about employee stock options. “With Groupon's wild success in the public markets, Zynga CEO Mark Pincus may be giving second thoughts to those stock distributions,” wrote LeClaire.

Based on sources familiar with the matter, as reported in Wall Street Journal, LeClaire wrote, “Early last year, as 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.”  “The executives chose an unusual solution: They began demanding that certain employees surrender some shares or be fired,” added LeClaire.

As per the Newsfactor.com report, 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,” wrote LeClaire. In fact, according to WSJ report,  Zynga moved last year to compile a list of Zynga employees whose performance might not justify their large grants of restricted shares, LeClaire wrote.

However, according to Newsfactor.com, Zynga could not immediately be reached for comment. The report quoted Charles King, principal analyst at Pund-IT, as saying, “the move is culturally distasteful from the standpoint of Silicon Valley.”




Ashok Bindra is a veteran writer and editor with more than 25 years of editorial experience covering RF/wireless technologies, semiconductors and power electronics. To read more of his articles, please visit his columnist page.

Edited by Jennifer Russell

TechZone360 Contributor

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