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As Zynga IPO Approaches, CEO Pincus Demands Stock Back from Employees, Lest they be Fired

According to the November 10th news.cnet.com article, “Zynga to employees: Give Back our stock or you’ll be fired”, Zynga CEO Mark Pincus, in coordination with upper management, made the decision last year in preparation for an initial public offering (IPO) they had issued too much stock to employees. Their solution? Demand of employees that they return stock that was not yet vested, or be terminated.

According to information at the company’s website, Zynga Inc. is the world’s largest social game developer with more than 232 million monthly active users playing their games which include CityVille, FarmVille, FrontierVille, Words With Friends, Mafia Wars, Zynga Poker, Cafe World, and Treasure Isle. Zynga Inc. games are available on a number of global platforms including Facebook, MySpace, Yahoo, the iPad, the iPhone and Android devices. Through Zynga.org, Zynga players have raised more than $10 million for world social causes. Zynga Inc. is headquartered in San Francisco.

In determining which employees would be asked to return stock, Zynga was seemingly trying to avoid a situation where lower-level employees would become wealthy because they own a piece of the company, according to the November 11th forbes.com article, “Zynga is Greedy Game Industry Scum, Steals from Employees to Help Bottom Line”. To quote author of the article, Louis Bedigian, “Its chief executive, Mark Pincus, has admitted to doing “every horrible thing in the book” to get revenues. So why should employees believe him now when he says he’s only thinking of the company’s future?”

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In other words, Zynga wanted to avoid a “Google chef” situation. This refers to Google’s IPO in 2004. At that time, one of the company chefs, who’d been hired when the firm first launched, left with almost $20 million worth of stock after the stock went public.

Obviously, the first question would be, is that legal? Some employees don’t think so. One left the company another stayed; both have hired attorneys to see that they’re not forced to give up all of the stock.

It’s anyone’s guess how it will all pan out, but Zynga management justified their actions by touting that “it was best for the company.”

It’s also reported that Zynga was planning to go public following the Thanksgiving holiday. The IPO is expected to fetch in the neighborhood of $1 billion.

Mark Jonathan Pincus is an Internet entrepreneur best known as the co-founder of Zynga, which makes online social games. Pincus also founded Freeloader, Inc., Tribe Networks, and SupportSoft. In 2009, Pincus was named “CEO of the Year” in The Crunchies and in the same month of 2011 was named Founder of the Year for 2010. Zynga was named after an American bulldog once owned by Pincus.

According to information at Wikipedia.com, in a 2009 video Pincus is quoted as having said: “I did every horrible thing in the book too, just to get revenues right away. I mean we gave our users poker chips if they downloaded this Zwinky toolbar which was like, I don’t know, I downloaded it once and couldn’t get rid of it.”

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Posted by on November 11, 2011. Filed under Legal News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry



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