San Francisco, CA, United States (4E) – Social media game company Zynga missed its forecasted earnings in the second quarter. Despite this setback, and to prevent talented employees from leaving the company, full-time employees received equity grants and stock options, according to a person close to the matter.
Stock options are granted to full-fledged Zynga employees quarterly but the equity grants were granted to every company employee after its second quarter earnings failed to meet expectations.
Since Zynga offered its public offering late last year, its share price has dropped dramatically by 70 percent. Staff who were on board before the public offering received restricted stock units.
“The company had 2,846 full-time employees at the end of last year. An option gives the bearer the right to purchase shares at a preset price at a specified time. Zynga had 77.4 million options outstanding, with a weighted average exercise price of 76 cents apiece, as of June 30, according to a regulatory filing,” Bloomberg reported.
“It’s a proactive move to prevent mass exodus. It’s positive for morale and I think it’s the fair thing to do,” said Sterne Agee & Leach analyst Arvind Bhatia.
Most start-ups companies pay with equity grants instead of bonuses to make it more attractive for employees. These shares do not dilute the shares of shareholders.
Zynga also announced that chief operating officer John Schappert is resigning from his post. The company is partly blaming its second quarter losses on the changes Facebook has made to its interface, specifically Timeline. Zynga believes that the new interface isn’t helping attract users to its games.
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