Zynga Stock Restructuring Plan Gives CEO More Voting Power - Bloomberg

http://www.gamepolitics.com/2011/08/26/zynga-stock-restructuring-plan-gives-ceo-more-voting-power

August 26, 2011

Power to the Pincus. Zynga is changing its stock structure in a way that gives the shares held by its Chief Executive Officer Mark Pincus 70 times more voting power than shares to be sold in its planned initial public offering. Zynga's board approved three different tiers of stock, giving each one of Pincus's shares 70 votes. This is up from 10, according to documents obtained by Bloomberg. Pre-IPO investors and current holders will get seven votes per share - up from one vote per share. Public investors will get one vote for each share.

The move would make it so that Pincus would get more power than is usually given at other public technology companies.

"Zynga has invented something new," said Lise Buyer, a principal at IPO advisory firm Class V Group in Portola Valley, California. She was an adviser for Google's IPO. She tells Bloomberg that having three tiers of stock is "unprecedented" for a technology company, adding that the move might be a way to quell the power of a "large number of shareholding staffers."

"Maybe there are so many early employees that even 10-to-1 would put the ultimate decision power in the hands of too large a group of employees or investors," she said.

Zynga has asked current shareholders to agree to the new stock structure by Sept. 2, according to a legal contract distributed by Deputy General Counsel Karyn Smith last week. If approved, the new structure would take effect at about the time the IPO is planned. Pincus is the largest shareholder of the company with 16 percent.

Source: Bloomberg