Zynga CEO Asked Some Staff to Return Pre-IPO Shares (Report)

1:05 PM PST 11/10/2011 by Georg Szalai

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The awards of shares helped keep salaries for top talent in check, but select employees, whose job performance was seen as not justifying large grants, were told to surrender shares or be fired.

NEW YORK – Amid preparations last year for an IPO, which is expected later this year, Zynga CEO Mark Pincus and other top executives of the social gaming firm concluded that the firm had handed out too many stock rights to executives who may not have deserved them and started demanding them back, the Wall Street Journal reported.

The awards of so-called restricted shares helped keep salaries for top talent in check, it said, adding that some employees, whose job performance was seen as not justifying large grants, were asked to surrender some shares or be fired. Zynga has long emphasized that it is a meritocracy.

The shares matter given the expected IPO, which observers have said could value Zynga, the maker of such Facebook games as CityVille, FarmVille and Mafia Wars, at close to $20 billion.

Zynga's demand that some staff return shares could lead to some litigation and set a precedent in Silicon Valley, which has long relied on stock options and similar awards to attract talented employees, the Journal said.

The Journal said Pincus wasn’t available for comment.

A company spokesman declined comment. The company’s IPO is expected before year’s end, although Zynga hasn’t provided a timetable.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai