Reports are that Zynga has revamped their stock structure to grant far more voting power to CEO Mark Pincus. The new structure grants each one of Pincus’s shares 70 votes, up from 10, pre-IPO investors and other current holders will get seven votes a share, up from one, while public investors will get one vote for each share.
This is drastically more power than executives have been granted at other technology companies, with LinkedIn and Google granting only ten times the normal voting rights per share. “Zynga has invented something new,” said Lise Buyer, a principal at IPO advisory firm Class V Group, noting that three tiers of stock is “unprecedented” for technology companies. “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.”
“In other industries, we see the collapse of these structures,” said Greg Taxin, the former CEO of proxy advisory service Glass Lewis, now a principal at Spotlight Capital Management in New York. “It’s only because the founders of these new Internet companies believe they can do no wrong and everybody else is desperate to invest alongside them that they can get away with this.”
Source: Bloomberg
