I usually don’t go off on tangents here but this is absolutely ridiculous.
Zynga, the maker of CityVille and FarmVille maker apparently wishes it hadn’t given out so many stock options to employees on the verge of their potentially huge IPO.
The Wall Street Journal reported today that Zynga CEO Mark Pincus, along with his top executives, decided last year as they were preparing for an initial public offering (IPO) that they had given out too much stock to employees.
Rather than kicking themselves for being too generous, the executives are reportedly demanding employees give back not-yet-vested stock or face termination.
In order to determine which employees would be asked to give stock back, Pincus and his executives tried to pinpoint workers whose contributions to Zynga–in the execs’ eyes–didn’t necessarily justify the potential cash windfall they could receive when the company went public, the Journal claims. One Journal source said that Zynga executives were especially concerned with not creating a “Google chef” scenario.
That reference relates to Google’s 2004 IPO when one of the company’s chefs, who was hired in the firm’s early days, walked away with $20 million worth of stock after the shares went public.
Check this part out.
After finding people to target, the Journal’s sources say, Pincus offered his ultimatum. However, as one might expect, he faced some anger from employees who didn’t believe they should be required to give back the stock. The Journal cited two employees–one who has left Zynga and another that still works with the company–who hired attorneys to reach a settlement that saw them give up some, but not all, of the unvested shares.
Although Zynga’s decision might be met with some criticism, the firm’s executives reportedly justified their strategy by saying it was best for the company.
So when you had to attract these employees because you were a young company with no cash – was that the best for the company then?
Here’s a note for people reading this – what does this say about the morals of the company’s executives who think and act like Gordon Gekko?
This is one of the most short sighted and stupid moves I have seen a company do and I’ll tell you why. It’s penny wise and pound foolish.
Now we know how these money hungry vultures who run this company think..what’s next? Why not forge documents after they go public to show that they’re more profitable than they are? why not bend the truth in their quarterly statements to squeeze out just a little more profit? Why not lie to investors about the amount of executive compensation?
Hey dummies! – Once you show that you’re unethical, it opens up the door for suspicion for much more.
They are reportedly going public sometime after Thanksgiving. If you’re planning to invest in this company at their IPO, don’t say you weren’t warned!