Report: Zynga Demands Stock Back From Employees

The man behind monster hits FarmVille, Mafia Wars and CityVille is scrambling to reclaim some of the stock options he handed out to long-time employees, the Wall Street Journal reports.

Citing several employees, the Wall Street Journal article says Zynga CEO Mark Pincus and a cadre of executives decided last year that they needed to get some of their stock options back from employees. The story says that the company approached some employees and gave them two options: Return the options or get fired.

The demands came as the company was preparing for its initial public offering, a move that could make any long-term, stock-holding employee rich if things went well. The Journal says that the executives worries that they were going to create a “Google Chef” situation, referencing the search engine chefs who fell into $US20 million worth of stock after that company went public.

That returned stock, the article continues, was to be used to attract new talent. It comes off a bit like buyer’s remorse.

Zynga didn’t comment for the article and when reached today by Kotaku, they again declined to comment. But Fortune has another take on the situation.

The finance pub says that asking for stock back from under-performing employees isn’t that unusual and that it’s better than just firing them. Instead, the author guesses, those employees were demoted to a point that really shouldn’t have had the stock in the first place.

Without Zynga weighing in on the issue, and with the impacted employees remaining unnumbered and unnamed (two sources were cited in the Journal story), it’s hard to see what really happened here. But I’m sure it’s not the sort of thing a company about to go public wants floating around.

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