Zynga Staff Prepare to Sell Diminishing Shares

Zynga Staff Prepare to Sell Diminishing Shares

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After Zynga execs cashed out, staff face shrinking returns on their stock.

It's a bad time to be a Zynga employee. Recruited on the promise of bountiful stock options, they had to sit on their hands when CEO Mark Pincus and other important Zynga insiders sold portions of their holdings for millions of dollars. Since then the share price has plummeted and the timing of this dive, coinciding as it did with the sell-off, has led to accusations of insider trading. Throughout this nightmare Zynga employees had to watch their promised fortunes shrink to a much more modest payout, but come August 16th they get to finally see some return on their shareholdings.

August 16th is when the lock-up period on 150 million shares finally expires, allowing their holders to sell. No doubt they will, and in large numbers, but this will mean that the share price will decrease even further. Whoever gets out the door first on those trades will make the most - such as it will be - on their holding, which may result in another sudden price dip. According to NASDAQ it's trading at $2.845 per share as I write this. When those 150 million shares come on the market, it's anyone's guess where Zynga's share price will end up; $2.845 per could look like a high point.

In response to the stock price drop Zynga has reshuffled top staff, taking away COO John Schappert's responsibility for games and giving it to two other senior staff. It would seem that Schappert - who made $3.9 million net when he sold his stock, as compared to Pincus' $200 million - is carrying the can for at least some of the company's misfortunes. Zynga's official statement on the reshuffle was appropriately modest: "we can confirm that in order to unify our company around a multiplatform approach, we reorganized our teams in July to integrate web and mobile groups."

This is all sounding eerily familiar. Employees lured in on promises of stock options that never live up to the hype, watching - horrified - as their dreams of future prosperity tank along with the share price? Trouble brewing at the top, as senior staff jockey for position? This is all a little too close to the dot-com bubble mistake that people went through back in 2000; though at least Zynga - unlike many of the dot-coms - managed to produce some product, however people may feel about the quality of their output.

Sources: Gamesindustry Biz, Gamasutra

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I feel sorry for them I really do. They're just doing there job. For all the shady practices that Zynga has done, I put no blame on the peons. They have no say in how the company is run or what game is made. Everyone needs a job, and I hear that the games industry is notoriously hard to get one in. So to get any job, even one in a company with such "questionable" morals is a god send. Then to get shit on as the execs come out smelling of roses... Makes my idealist angry, and my pessimist smug.

Eric the Orange:
Then to get shit on as the execs come out smelling of roses... Makes my idealist angry, and my pessimist smug.

They were not shit on at all. Stocks go up and stocks go down that is the risk you take with them. Its not like the stocks actually costs these guys anythin.

Moral of the story: be careful who you work for.

DVS BSTrD:
Moral of the story: be careful who you work for.

Except most of the companies that ended up working for Zynga were companies that were bought out. And when you are the only game in town in the local area when it comes to employment when relating to game development and the like then there is going to be problems.

Suki_:
They were not shit on at all. Stocks go up and stocks go down that is the risk you take with them. Its not like the stocks actually costs these guys anythin.

If they were forgoing better pay in favour of stock options which are now worth nowhere near what they were expecting then yeah, I'd say they kind of got shit on. That's to say nothing of the fact that the execs got to sell their shares as soon as they realized they weren't going to meet earnings targets while the rest of the employees may never see the kind of value those guys got for their share sales.

Tenmar:

DVS BSTrD:
Moral of the story: be careful who you work for.

Except most of the companies that ended up working for Zynga were companies that were bought out. And when you are the only game in town in the local area when it comes to employment when relating to game development and the like then there is going to be problems.

Well then you should have thought of THAT before you started making Facebook games.

Vivi22:

Suki_:
They were not shit on at all. Stocks go up and stocks go down that is the risk you take with them. Its not like the stocks actually costs these guys anythin.

If they were forgoing better pay in favour of stock options which are now worth nowhere near what they were expecting then yeah, I'd say they kind of got shit on. That's to say nothing of the fact that the execs got to sell their shares as soon as they realized they weren't going to meet earnings targets while the rest of the employees may never see the kind of value those guys got for their share sales.

Nobody even forgoes better pay in favour of stock options. They were given out as a hiring bonus to try and lure people to work their.

Zynga: The Enron of the Videogame world?

Both Bonfire and Newtoy were studios here in the Dallas area that were bought out by Zynga in the past few years, it's kind of sad to see that happen.

DVS BSTrD:

Tenmar:

DVS BSTrD:
Moral of the story: be careful who you work for.

Except most of the companies that ended up working for Zynga were companies that were bought out. And when you are the only game in town in the local area when it comes to employment when relating to game development and the like then there is going to be problems.

Well then you should have thought of THAT before you started making Facebook games.

It's funny, I recently met a guy who used to work at Gearbox back during the first BL but moved onto Ensemble to work on Halo Wars. After Ensemble got shut down by Microsoft, he went to Bonfire, which was one of the branch-off studios comprised of mostly former employees. Next thing you know, you're bought out by Zynga and stuck making Facebook games. It's not what he ever wanted to do, or even started out doing, but you have to take what you can get in your region and the industry landscape definitely evolves and changes in ways that you may not like.

This is just what you get when you make a pact with the devil. It rarely ends well.

zynga devoted their entire business practices to theft and milking skinner boxes as far as it can go and when you work for a business who outright says its cheaper to steal you cant expect them to do anything but screw over everyone

Suki_:
Nobody even forgoes better pay in favour of stock options. They were given out as a hiring bonus to try and lure people to work their.

I didn't say they gave up getting paid I said they may have passed on getting paid as much as they should have because they were getting stock options. The practice isn't uncommon among start ups when giving stock options is easier than raising the money to pay the salaries in the early days, or when they just want to free up some cash flow. I absolutely did not imply it was one or the other for them as you seem to have assumed.

Vivi22:
I absolutely did not imply it was one or the other for them as you seem to have assumed.

Funny my post says absolutely nothing like that. Next time try reading my post before making assumptions.

Suki_:

Vivi22:
I absolutely did not imply it was one or the other for them as you seem to have assumed.

Funny my post says absolutely nothing like that. Next time try reading my post before making assumptions.

Forgive me, I made a simple reading error. It happens when I skim posts quickly sometimes so my mistake. My point still stands though as there have been numerous cases of people forgoing better pay in exchange for stock options in the past. Stock options are not something which is only given out as a bonus. They can also be a part of the persons regular pay in lieu of cash.

I despise Zynga, and initially I agreed with the insider trading claims, but something occurred to me... how much of this sudden stock price tumbling is the RESULT of their cash-out? Millions of dollars of shares selling all at once can't be good for the stock price.

Of course, the real question now is, will they recover? If there's any chance of it, now would be a VERY good time to buy.

P.S. Thanks

My Facebook page would be happy if this company ceases to exist, but I hope not, for the sake of their employees

All this talk of stock options remind me of Birdemic,

GoddyofAus:
Zynga: The Enron of the Videogame world?

I was just thinking this as well. I think it's disgraceful that the execs can do this. I hope the insider trading stuff goes through and they get bitchslapped by the government. Also, if there's no more Zynga that means no more Draw Something. I don't care about the other stuff, I know it's shit but it doesn't affect me, but Draw Something is awesome!

nikki191:
zynga devoted their entire business practices to theft and milking skinner boxes as far as it can go and when you work for a business who outright says its cheaper to steal you cant expect them to do anything but screw over everyone

Precisely. I don't know how anyone can be surprised by this. Zynga is awful. They aren't making games. They are stealing other peoples ideas and turning them into money milking godawful excuses for video games. There is nothing fun about their products. And it takes most people just a few months to figure that out. Zynga never stood a chance with that kind of business model.

 

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