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Microsoft's Mattrick Tried To Buy Zynga Before Jumping Ship

| 8 Jul 2013 14:30
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Could Mattrick be a Trojan?

When Don Mattrick leapt like a gazelle made entirely of money from Microsoft to Zynga, it wasn't fully appreciated at the time just how close Mattrick was to Zynga's top brass. Mattrick and Zynga boss Mark Pincus used to be - and still are - road biking buddies, and while out on the trail they talked about this, that, and the possibility of Microsoft buying out Zynga, as part of a long courtship that went back to 2010. Of course, that isn't how things turned out in the end, as Mattrick was instead bought - to the tune of $95 million, potentially - by Zynga. Analyst Michael Pachter has already pointed out the absurdity of Mattrick's position. "To walk into a company that is not profitable, it's not growing," says Pachter, "and you've got the founder and majority controlling shareholder sitting in the office next to you ... what exactly can you get done?"

Well, that might depend on exactly what it is Mattrick intends to do. To earn the lion's share of his mega-payout Mattrick has to be a Zynga man for three years minimum. But if he really wants a jackpot he could just sell Zynga. Under the terms of his contract Mattrick would collect at least 25%, and perhaps as much as 50%, of his Zynga bonanza as soon as the deal goes through. Of course, a deal would probably also push up Zynga's share price, and a substantial chunk of Mattrick's compensation comes in the form of Zynga stock. Plus any deal is bound to come with golden inducements for the man making the thing happen, your friend and mine, Don Mattrick. As to which big corporation Mattrick might turn to in order to sell off Zynga, weeeeeellll ...

Will this happen? Your guess is as good as mine. But there is something interesting in Mattrick's pay package regulatory filing. Mattrick is now part of a two man executive committee - Pincus is his other half - designed to "facilitate approval of certain corporate actions." If that committee ever goes away or expands, Mattrick can claim severance as if he had been fired arbitrarily, so he's sitting pretty however this turns out. But you do have to wonder just what those corporate actions are likely to be, and why it wants a team of just two people - who've already talked about selling Zynga - to carry them out.

Source: Bloomberg

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