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Ahead Of IPO, Zynga Accused Of Demanding Shares Back From Employees
Ahead Of IPO, Zynga Accused Of Demanding Shares Back From Employees
November 10, 2011 | By Frank Cifaldi

November 10, 2011 | By Frank Cifaldi

A common tactic amongst start-ups is to conserve cash by offering its early employees stock options in lieu of higher salaries, and social gaming giant Zynga was no exception.

Now, some four years later and on the verge of a potential $1 billion initial public offering, the company is being accused of asking for some of those options back.

A Wall Street Journal article making the rounds Wednesday morning accuses CEO Mark Pincus of demanding that some early employees return their not-yet-vested stock or face termination.

The article cites two current Zynga employees who have hired attorneys to reach a settlement. The employees were said to have given up some -- though not all -- of their unvested shares.

An alleged email from the CEO obtained by Fortune refutes these claims, saying that the story "is based on hearsay and innuendo."

"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," he said.

According to Fortune blog Term Sheet, the most likely scenario here is that the company is looking to adjust the amount of stock options employees get based on their contributions to the company. The blog argues that rather than terminate employees and inherit their unvested interests, Zynga has traditionally found new roles for under-performers, and that it is these adjusted positions that the company is targetting.

Zynga did not immediately respond to a request for clarification.

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Cordero W
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Meanwhile, I must say, that is a smashing dog logo they have there.

Ian Bogost
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I clicked it.

Jason Schwenn
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Now that you've brought my attention to it, it does indeed give me a striking sense of Canine Communist Party.

Nou Phabmixay
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I'm glad scams and spyware are ethical things to build your company on. It certainly helped them but don't give me this ethical line.

Felipe Budinich
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Stay classy Zynga.

jin choung
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better idea.

all the employees getting the demand need to stick together. Keep us all or fire us all. Make a commitment to each other.

and they need to go public. All of them together. They already have the eyes and ears of the media. Youse It and raise such a huuuuge stink, jump on the back of occupy wall street, make it about the 99% working man against the greedy claws of the executives.

go so ugly so fast and hard that they either let them keep the options or bury them in bad p.are.

and if it looks like they will retaliate, UNIONIZE!


FIGHT BACK and make the ceo regret he ever thought to f with you!


Jane Castle
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Exactly the employers should stand their ground and say. Hey I worked just as hard as everyone else to be part of this pump and dump scheme so I am not selling out..... Well not yet anyways...... ;P Or better yet tell them that Zynga can have their shares on the day of the IPO.....

Mark Reis
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So how much of the stock options were the alphabet boys being asked to return? And how were the salaries and compensation packages being renegotiated to compensate for the return of options.

You offer options, that invites an employee to take a risk: Lower Salary, possibly stock that is worth the difference, hopefully more.

You also take a risk yourself: the stock will be worth a lot more than you really want to pay your employees because they did a really great job.

If the alleged recall is true, I think the CEO should leave the company and go get a job with the rest of his ilk on Wall Street.

Michael Joseph
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"the most likely scenario here is that the company is looking to adjust the amount of stock options employees get based on their contributions to the company."

lol. Suggest that they didn't earn their agreed upon compensation... that's some good spin right there...