The Real 'Scandal' Over Zynga Stock Options Is Over Misleading Reporting

from the let's-work-this-out dept

There were a bunch of reports last week about a so-called "scandal" at social gaming company Zynga, concerning reports that it demanded stock options back from employees or they would be fired. Zynga certainly has done some questionable things over the years, and hasn't always had the greatest reputation... so a lot of people jumped on this story, and plenty of people submitted it. But, the details suggest that the only real "scandal" here is in the attempts by reporters to make this into a scandal (kudos to Dan Primack for not getting fooled). The reporters doing so either don't understand what really happened or are just attacking Zynga for the hell of it. I've got no problem calling out Zynga when I think the company has done something bad, but the details here suggest that what Zynga did is actually pretty reasonable.

The part that gets lost in most of the discussions is the fact that Zynga was only asking about unvested stock options, rather than vested ones. Unvested stock options are just like future salary. You can lose it if you get fired. What Zynga did here was take a few employees that it felt weren't achieving up to expectations and, rather just fire them -- in which case they would have received none of their unvested options -- try to find another role for them in the company. That other role, however, would be somewhat lower on the totem pole, and thus, would be entitled to fewer stock options. Yes, it's basically a demotion, but for some people perhaps that's preferable to an outright firing.

But here's the key point. Most of the "Zynga bad!" reporting on this made it sound as though Zynga was taking back options that had already vested. That's false and misleading. Nothing was taken back from the employees. The already vested options remained untouched. Basically Zynga was offering a way for people, who otherwise would have been fired, to keep accumulating some options, just at a lower rate. That may be insulting, but it seems like a more reasonable and humane solution than just firing them outright.
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Filed Under: journalism, options, vesting
Companies: zynga


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  1. icon
    Killercool (profile), 18 Nov 2011 @ 4:45pm

    Re: Carrying water for Zynga because it's against SOPA!

    It's not "give back or be fired", it's "give back and keep your job, or get fired and lose them anyways".

    Basic reading comprehension, FTW

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