Zynga chief’s $1 billion-plus payday

One-Percenter of the Week: Mark Pincus made more than $1 billion last week when shares hit the market at $10 each. Plus, even before the IPO, he got to sell a bunch of shares back to his company at $14 a share.

By MSN Money Partner Dec 21, 2011 4:18PM

By Michael Brush

 

To get a leg up in the popular social networking game "Farmville" on Facebook, hard-core players buy virtual coins so their avatars can purchase virtual farm equipment.

 

But there's nothing virtual about the huge amounts of wealth being amassed by the inventors of popular online games.

 

Mark Pincus, Zynga CEO / © Jeff Chiu/APTake Mark Pincus, CEO of Zynga (ZNGA), the company behind "Farmville" and big online gaming hits like "CityVille," "Mafia Wars" and "Words With Friends." When Zynga shares went public last week, the world got to see just how astonishingly lucrative the fantasy world of social networking games can be.

 

At the opening price of $10 a share, Pincus was up a cool $1.2 billion for his efforts in founding Zynga in 2007 and nurturing it into a company that will take in $1 billion in revenue this year. For the sheer size of this payday, and what it says about incomes in the U.S.A., I'm making him my latest One-Percenter of the Week.

 

An edge on the sale

Pincus owns 112.2 million shares of Zynga, or about 16% of the company, and he has 7.2 million options, most of which have an exercise price at 17 cents, according to filings. So even after the shares slipped to $9.25 this week -- leaving everyday investors who bought the first day at $10 to $11.50 a share in the red -- Pincus' stake was still worth over $1 billion.

 

The hit to his wealth might have been worse. But earlier this year, in a move that raised eyebrows in the IPO world, Pincus hedged his bets by cashing out a sizable stake in the company before it came public, at a time when other Zynga employees were blocked from doing so.

 

In March, he pocketed more than $109 million when he sold 7.8 million shares back to Zynga at nearly $14 per share, 40% more than  the  IPO price of $10. In fairness, while Zynga blocked other employees from selling in March when fervor for the IPO was pitched, hundreds of employees have been allowed to sell tens of millions of shares at prices ranging from 25 cents to $17 a share.

 

Tribute to the pay gap

Now, I don’t begrudge anyone who gets paid well for founding a successful company. Entrepreneurship is part of the lifeblood of our economy. Zynga employs 2,800 people, and it's already profitable. It is the world’s leading social game developer, with 152 million users in 175 countries. About 54 million people play Zynga games each day.

 

But Pincus' $1 billion in earnings for creating a game company that runs on virtual money clearly underscores the widening gap in reward between those at the top and the rest of working Americans. So it's tough to let him off because "this is how the game works." It's precisely because this is how the game works that so many people are ticked off about widening pay disparities, and so many academics are concerned about the damage it does to our social fabric. The last thing we need is a huge underclass that gives up because they have the sense the game is fixed.

 

Over the past few decades, the CEO-worker pay gap has widened to about 350-1, from around 40 in the 1980s. And research by Emmanuel Saez of the University of California, Berkeley shows that between 1993 and 2008, the top 1% of families raked in more than half the gains in overall income.

 

Pincus' huge payday exemplifies this trend. I'm pretty sure the entrepreneurs who came up with Monopoly, one of the most popular games ever, never even dared to dream they could make the inflation-adjusted equivalent of $1 billion off the game in the first three years, let alone in their entire lifetimes.

 

Besides, a billion-dollar payday still seems a little outrageous at a time when so many people are unemployed -- including, most likely, many "Farmville" fans who have plenty of time to play the game because they're out of work.

 

While many people struggle to pay their mortgages and lose their homes in foreclosure, Pincus has two houses on the market in San Francisco -- one at $8.1 million and the other at $2.2 million, according to The Wall Street Journal. His newly minted $1.1 billion in Zynga wealth is one-seventh of the entire worldwide market for fantasy game virtual goods, which is worth around $7.3 billion, according to In-Stat, a market research firm.

 

So for the way his IPO payday underscores the vast and growing pay inequity in our country, and for the sheer remarkable size of his score, I'm making Pincus my latest One-Percenter of the Week.

 

More One-Percenters of the Week:

 

 

VIDEO ON MSN MONEY

66Comments
Dec 22, 2011 12:36AM
avatar

Thumprr...  People can pay for entertainment anytime they want....

 

They can sit in front of a TV and watch cable, or they can go to the movies and pay stars to entertain them.  Some prefer concerts.  Some prefer to watch sports.  Some prefer to drink in local taverns.  Some love to gamble in casinos.

 

All I can say is most of these activities are what you refer to as a 'waste' of money.   My wife thinks my fishing is a total waste of time and money. 

 

But that is the beauty of FREE America, you can SPEND your money however you want.  I am sure some democrats think that you should not be able to do so...

 

 

Dec 21, 2011 9:31PM
avatar
What you are worth has nothing to do with how much you have.
Dec 21, 2011 10:56PM
avatar
really how about you guys come up with a good idea and get rich.  he took the risk. this could have been a complete failure and none of you would gripe. but because he made money off his idea you are all sour-grapes.   make your own game, if it's this "easy".  but the creator of the game deserves the reward .  it  is all  on his shoulders. 
Dec 21, 2011 9:18PM
avatar
he made it , its his , so what. get over it already.
Dec 22, 2011 12:03AM
avatar

Well, he risked money and time to make the game. People bought the game, people liked the game, more games were built more people bought the games, more money he made. Now he went public with his company. (His company). We the people vote with our wallet. If anyone doesn't like what he did don't spend money with his company.

 

Dec 22, 2011 6:37AM
avatar
I knew when people were paying starbucks $5-7 for a coffee this country had lost it. I do not blame the companies that make these stupid things, If I knew idiots would have paid me to play a 8 bit game on the internet I sure as hell would have took them for every dime.

After all, a fool and his money are soon parted, and if I do not take their money someone else will. They would just find something else equally worthless to spend their credit on. Notice I say credit, because if you are paying to play a free game you surely do not have a grip on your finances.

Dec 21, 2011 9:27PM
avatar

Hey! dingbat ' what the people want '

The chance to make big $$ is there for you too.

All you have to do is get off the internet, stop whining and DO something constructive with your time.

Dec 22, 2011 3:25AM
avatar
No one can fault this guy for making so much money. He started a company that makes games for facebook. These games are free to play just like Facebok is free to join. Like anyone else who starts a company, there must be a reason behind it and it's usually money. he added the ability for people to buy play gold to use in the game and charges real money to buy it.  World Of Warcraft and many other companies have been doing it for a very long time. He doesn't make anyone buy it, you can still play the game without it, if people decide to buy it so they can look like they work hard on their farms then he collects. Nothing wrong with it.  It's the big companies that keep recycling the same useless CEO's after they run one company into the ground for $100 million a year someone else hires them after they get canned and then they get another $100 mil a year to run another company into the ground. Those are the people taking advantage of everyone else. They make all that money whether they do a good job or not while others are out of work who could do a better job at a fraction of the pay.
Dec 21, 2011 11:03PM
avatar
People have got to be complete idiots for paying to play these games.  What a waste of their hard earned dollars.  Looks like there is a fool born every second.
Dec 21, 2011 9:39PM
avatar
Some  people have to do very little or have no talent to make a ton of money. That includes this dude. Justin Bieber, Britney Spears, any reality show ( the Kardashians, the Jersey shore airheads) have absolutely no talent, There are talented hard working people out there that struggle everyday to make ends meet.
Dec 21, 2011 10:49PM
avatar
I have no problem with somebody making money, what amazes me - is the amount of money people are willing to spend on "nothing" to buy "nothing"?? I have played some of these games but I refuse to spend my hard earned cash on nothing.
Dec 22, 2011 9:05AM
avatar
.. and yet, the company's online games are nothing if not BUGGY ALL TO HELL!  Addictive, yes, but the constant frustration of trying to make them work right cured me of my addiction.

Whatever money he got from suckered gamers, glad none of it was from me.

Dec 21, 2011 11:15PM
avatar
What goes up must come down, the shares are going to be worth 25 cents in three years. There is a sucker born every minute.
Dec 21, 2011 10:59PM
avatar

   I often bash overpaid CEO's paid 10's or 100's of millions of dollars a year. Most major companies like GE, AT&T, Boeing etc, etc. would make billions whoever was at the helm,. There's absolutely no justification in paying these people a large percentage of profits when what made them great companies has nothing to do with who the CEO is.

 

  That being said someone like the guy in this article is the sole reason this company exists and he deserves whatever he makes.  As the article states 100's of employee's have already sold millions of shares and are probably wealthy. I doubt they'd complain that the man that made them rich made more.

Dec 22, 2011 6:58AM
avatar

A reflection of our society ......crazy.

 

I would like to know how many Occupy Insanity morons have given their money to this man.

Dec 22, 2011 5:13AM
avatar
very sad that people would pay for a browser game...what a bunch of silly people.. :(
Dec 22, 2011 9:00AM
avatar
What I find hilarious is that Zynga got it's beginnings as a scammer/spyware company. Most people forget this information. Who knows what info they and facebook are sharing and selling about you, its suckers? Stupid Is, as stupid does, I suppose.
Dec 22, 2011 9:34AM
avatar
So for the way his IPO payday underscores the vast and growing pay inequity in our country, and for the sheer remarkable size of his score, I'm making Pincus my latest One-Percenter of the Week.

 

In other words you are mad at this guy because you are not smart enough to earn the money he has, This article is just more fanning of the flames of the class wars that is going on in this country.

 

Idiots like the person who wrote this article who can not compensate for their own shortcommings.

 

Lets the flames begin!!!

Dec 21, 2011 9:55PM
avatar

I am not rich and If I put my mind too it and advanced my aducation and got my **** going, The "Opportunity" is out there.  Not myself, but some think they are entitled and wait for handouts.

 

Dec 21, 2011 10:12PM
avatar
I admire hard work and ingenuity but, FARMVILLE?! Seriously, that has to be one of the most annoying games on the planet. 

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

RECENT QUOTES

WATCHLIST

Symbol
Last
Change
Shares
Quotes delayed at least 15 min

MARKET UPDATE

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes

[BRIEFING.COM] The stock market began the new trading week on the defensive note with small-cap stocks pacing the retreat. The Russell 2000 (-1.4%) and Nasdaq Composite (-1.1%) displayed relative weakness, while the S&P 500 lost 0.8% with all ten sectors ending in the red.

Global equities began showing some cracks overnight after China's Finance Minister Lou Jiwei poured cold water on hopes for new stimulus measures. Specifically, Mr. Lou said the government has no plans to change ... More


Currencies

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.