Zynga to Employees: Return Stock or Risk Being Fired

Zynga CEO Mark Pincus has been reportedly accused of asking some of the social gaming company’s early employees to give up their shares, or risk being fired.

On Thursday, the Wall Street Journal ran a front-page story on the company behind popular Facebook games like Farmville and Mafia Wars, indicating that Zynga was “leaning on some workers to surrender pre-IPO shares.”

Zynga CEO Mark Pincus has been reportedly accused of asking some of the social gaming company’s early employees to give up their shares, or risk being fired.

On Thursday, the Wall Street Journal ran a front-page story on the company behind popular Facebook games like Farmville and Mafia Wars, indicating that Zynga was “leaning on some workers to surrender pre-IPO shares.”

In the story, the Journal reported that Pincus often gave shares rather than high salaries to his top talent as he built the online-gaming startup. But as Zynga grew into a multi-billion dollar company, Pincus “appears to have developed giver’s remorse,” adding that a few early employees who received stock in the company are being asked to renegotiate the terms of their holdings based on performance.

In some instances, according to the report, the company threatened to fire employees if they did not surrender some shares.

Pincus, whose company is under a “quiet period” mandated by SEC regulations prior to its IPO, did not issue a public statement, but instead blasted an internal memo to his employees, saying the Journal’s report cast the company “in a false and skewed light,” and describing Zynga’s policy of meritocracy as providing every individual “the same opportunity to lead.”

Related: Zynga plan IPO float: Valuing company at US$20 billion

[quote]Team,

The wall street journal posted a story last night (copied below) which paints our meritocracy in a false and skewed light. The story is based on hearsay and innuendo which is disappointing but is to be expected as we move towards becoming a public company.

We have nothing to hide in our past and present policies and I am proud of the ethical and fair way that we’ve built this company.  As many of you have heard me say — we’re building a house that we want to live in.

Being a meritocracy is one of our core values and it’s on our walls.  We believe that every employee deserves the same opportunity to lead. Its not about where or when you enter zynga its how far you can grow. This is what our culture of leveling up is all about and its one of our coolest features.

we want everyone to put zynga first and contribute to the overall success of our company and all of you have.

thanks,
mark [/quote]

Dan Primark at Fortune, however, pointed out that the Wall Street Journal made things sound much worse than they really were.

Employees who underperform are often fired, especially in the fast-moving world of Silicon Valley, he wrote. But in Zynga’s case, he wrote, it seems that the company prefers to find those employees different positions in the company, though perhaps “lower down in the corporate totem pole” in the name of retaining talent.

The social gaming company has sold itself as a meritocracy in job postings and encourages its employees to “be the CEO” of their own areas. It’s also described itself as a very fast-moving company.

Labour and employment specialist, Andrew Bernstein agrees with Primark’s analysis. “It is contrary to the culture of what we’ve seen coming out of Silicon Valley in the last twenty years,” he said. “It will be interesting to see to what extent if any other Silicon Valley companies mimic” what’s happened at Zynga.

[quote] It’s a tradeoff. Start-ups are often short on cash and long on equity.” he said. “Here you have a circumstance where people took that bet and now the company has decided to redistribute. [/quote]