Popular online gaming company Zynga faces an unexpected scandal in advance of its upcoming initial public offering after The Wall Street Journal accused the company of forcing workers to return stock options.
Like many other technology startups, Zynga attracted higher quality employees by offering a company shares in place of higher wages. However, the company hoped to avoid a situation where early employees wound up with far more in stock than their work merited, so The Journal reports that the company began demanding some employees give up their rights to unvested stock or be fired.
The news source suggests that the practice could open up Zynga to potential lawsuits and also threatens an important foundation of Silicon Valley.
Fortune, however, portrays the practice differently, noting that Zynga makes a habit of offering under-performing employees an opportunity to step down in the company rather than being fired. If they were fired, they would lose the right to unvested stock regardless, but the lower position would not normally merit such compensation. Asking employees to forego their stock options then prevents them from losing their jobs.
Fox Business reports that Zynga is expected to conduct its IPO after Thanksgiving.