Zynga gives stock options to prevent 'mass exodus'

By Steve Watts, Aug 10, 2012 5:30pm PDT

Zynga has reportedly given equity grants to its full-time employees, after a poor earnings report caused a heavy stock loss. Zynga regularly gives stock options and bonuses to its employees, but this marked the first time an equity award was given to all employees. It's being seen by analysts as an attempt to keep from losing employees.

Bloomberg reports that employees who joined before the initial public offering had been paid partly with restricted stock units, which were devalued by the stock drop. This new round of stock options is a retention measure, according to Sterne Agee & Leach analyst Arvind Bhatia. "It's a proactive move to prevent mass exodus," he said. "It's positive for morale and I think it's the fair thing to do."

The stock drop was just the tip of the iceberg for Zynga's troubles. It has since become the subject of a class-action suit and investigation into alleged insider trading, and an infringement suit from EA. Just yesterday Zynga announced that Chief Operating Officer John Schappert, who used to work at EA before leaving for Zynga, had resigned effective immediately.

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