Social-gaming slumlord Zynga (Nasdaq: ZNGA) has lost yet another executive. Again we're talking about a higher-echelon C-suite name -- this time it's Jeff Karp, Zynga's chief marketing and revenue officer, who's turning in his badge.
Karp was one of three executives that Zynga had poached from Electronic Arts (Nasdaq: EA) over the past few years. He's part of EA's lawsuit against Zynga, alleging that the company stole these executives with the explicit intent of ripping off The Sims Social with The Ville.
The list grows and grows
Out of these three high-level defections, two are now gone. John Schappert resigned last month from his COO position, and another handful followed shortly thereafter. CTO of infrastructure Allan Leinwand called it quits earlier this month. Schappert had recruited Karp to join the dark side, so it's not too surprising that Karp is following Schappert out the door as well.
Let's re-tally our growing list of now-former Zynga employees:
|
Name |
Position |
|---|---|
| John Schappert | Chief operating officer |
| Alan Patmore | General manager of CityVille |
| Eric Bethke | General manager of Mafia Wars 2 |
| Ya-Bing Chu | Vice president in the mobile division |
| Jeremy Strauser | Studio general manager |
| Mike Verdu | Chief creative officer |
| Allan Leinwand | Chief technology officer of infrastructure |
| Jeff Karp | Chief marketing and revenue officer |
Incredibly, nearly half of the people on this list were chief-something-or-other, and Zynga's management page on its site has been shrinking rather quickly. Maybe some of these former employees weren't too keen on having their caricatured cartoonish faces all over the Web.
Talk about bad timing
Karp's last day is Sept. 22, and he's receiving three months' worth of salary as severance pay along with the accelerated vesting of 100,000 restricted stock units previously awarded, which the company calls Zynga Stock Units, or ZSUs.
Karp was given 1 million ZSUs when he joined up last July, a quarter of which vested this July -- sadly for him, the very day before the stock dropped 40% after earnings. Of these 250,000 shares that vested and became fully his, he surrendered almost 166,000 of them to cover associated tax liabilities. That's a tough break, because those shares were valued at $3.10 that day, a demoralizing 39% less than the $5.08 closing price just one day prior. Ouch.
That left Karp with about 84,000 shares of his own and 750,000 ZSUs remaining on his grant. Zynga is accelerating the vesting of 100,000 of these, so he should be left with about 184,000 shares after everything is said and done. At current prices, that stake is worth about $530,000, much less than the $9.4 million stake he had at the end of last year (1 million ZSUs valued at $9.41 each).
It's probably little consolation that Zynga is enjoying solid gains today after some positive comments from Facebook's (Nasdaq: FB) Mark Zuckerberg last night, saying that Zynga is "basically a strong company." Unfortunately, Zynga shares are still basically 70% less than where they went public.
Who's next?
The obvious question now: Who will be next to call it quits? There's one ex-EA exec left standing, and he's a whopper: Barry Cottle. He now spearheads Zynga's aggressive acquisition strategy and played no small part in the company's controversial purchase of one-hit wonder OMGPOP.
Source: Zynga.
Cottle defected from EA just this January, and he didn't come cheap. He received a $2 million signing bonus, an annual salary of $300,000, and a "guaranteed quarterly bonus" of another $250,000 for his first four quarters. The biggest chunk was 2 million ZSUs he received, valued at $17.7 million when he accepted the job.
The value of that stake climbed as high as nearly $32 million at Zynga's all-time high of $15.91 in February, only to shrivel up to just $5.7 million today. Those 2 million ZSUs vest in equal installments over four years, so all remain unvested, as he's been with the company for only eight months. All he can do is watch its value plunge ... or leave.
If Cottle decides to scuttle along with his former EA colleagues, that would be another major blow for Zynga. At the rate it's going, don't be surprised if this happens sooner rather than later.
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