Zynga Pressures Employees to Give Back Stock Ahead of IPO

Categories: Business, Tech
markpincus3.jpg
Mark Pincus
Social-gaming company Zynga, along with a handful of other large tech businesses, was successful earlier this year in getting the city of San Francisco to forgo its share of tax revenue on the firm's stock options. Now it appears that wasn't enough: Zynga CEO Mark Pincus has reportedly been demanding that some employees return what will likely be extremely lucrative stock before Zynga goes through its IPO.

The Wall Street Journal (subscription required) reports today that Pincus and other Zynga executives "decided the company had doled out too many stock rights to certain people in its early days." Their solution, according to anonymous sources quoted by the Journal, was to give employees two options: Give back the stock or be fired.

Pincus was reportedly worried about early employees making more money than more valuable employees, hired later on, who didn't acquire as much stock. Zynga, creator of wildly successful Facebook games such as FarmVille and Mafia Wars, has filed for an IPO, but not stated how much it hopes to raise.

Zynga has a longstanding reputation as a corporate malefactor, based on what former employees have described as Pincus' abusive personality and the company's cutthroat approach to appropriating competitors' game ideas. In that sense, this news seems to be a fairly predictable outcome of the tech firm's culture.

But if Pincus' strong-arming succeeds, it could have implications for the rest of the tech sector. Many start-ups lure talented workers with the promise of stocks that could result in a big payout come IPO-time. If Zynga retroactively dismantles that promise, will other tech companies have a hard time luring employees with stock riches?

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Penny Stock
Penny Stock

Looks like it would be of great use!

TooBigg
TooBigg

if early employees didn't end up being utterly critical in the building phase - a time with tremendous risk - that's a failure of management.  they should've been fired and their shares returned to the pool.  

it also suggests pincus, his execs, and the board did an amateurish job of capitalizing the company and now some of their 900 execs are grumbling that some rank & file engineer is going to be worth $200m.  at least they're curing cancer.  er whatever.  way to continue being prick of the litter, MP!

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