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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




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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