Published November 10, 2011
SAN FRANCISCO – Zynga Chief Executive Mark Pincus often gave shares rather than high salaries to his top talent as he built his online-game start-up.
But as Zynga grew into a multibillion-dollar company with hot games like "FarmVille" and "Mafia Wars," Pincus appears to have developed giver's remorse.
Early last year, as Pincus began preparing to take Zynga public, he and several other executives decided the company had doled out too many stock rights to certain people in its early days, say people familiar with the matter. The executives chose an unusual solution: They began demanding that certain employees surrender some shares or be fired.
Those shares matter as Zynga approaches an initial public offering, expected this year, that could value it at close to $20 billion and make holders of large blocks of stock wealthy.
Zynga's demand for the return of shares could expose the company to employment litigation—and, were the practice to catch on and spread, would erode a central pillar of Silicon Valley culture, in which start-ups with limited cash and a risk of failure dangle the possibility of stock riches in order to lure talent.
Read more about Zygna's about face in the Wall Street Journal.