Things are not looking good for Zynga. Their stocks crashed, COO John Schappert left and they’re being investigated for insider trading. After all this, employees would obviously want out. The company is going to keep them the only way they know how – throwing money at them.
Bloomberg is reporting that Zynga is now handing out equity grants to all of the company’s 2,800 plus employees. The company used to pay pre-IPO employees in restricted stock units, but their value is now almost nonexistent as the company’s stock hovers around $3.
Will the equity grants help keep on the talent that Zynga desperately needs? Analysts on Wall Street seem to think so with Arvind Bhatia, an analyst with Sterne Agee & Leach, saying that the offer is “positive for morale.” Frank B. Glassner, a partner with Meridian Compensation Partners, said that “when people have meaningful equity in a company, they have skin in the game.”
Glasnner also said that offering equity grants to employees will not have any negative effects on the company as far as shareholders are concerned. It’s about the best move that the company can make right now. They need a hit, badly, and the only people who can do that are the developers. Keeping them on board will help Zynga transition into the world of mobile where returns are much higher.
If Zynga is able to get back on top, those equity grants will become very valuable to the employees who stick around. If Zynga doesn’t perform as well as expected, they will be meaningless. The company is asking the employees to gamble on the future of the company that is currently uncertain. It will be interesting to see how many actually stick around.