Dec. 16, 2011 – The CEO of Zynga, the company that sells millions of dollars of imaginary animals and goods to gamers on Facebook and elsewhere, decided the company should buy some of his stock in March, months before it was to go public. Mark Pincus paid himself $109 million when he sold a tiny portion of his stock back to his company at $14 per share, according to Shayndi Raice and Justin Scheck writing in the Wall Street Journal.
Now that the initial public offering is planned for real, it turns out real buyers have no interest in paying $14 per share. After selling the shares at $10 each, the $1 billion the company raised were only ten times that raised by CEO Pincus. The first day’s trading dropped the price 5%.
“I don’t think it’s appropriate for founders to take out massive amounts ahead of early investors or ahead of the success that is demonstrated by the IPO,” Lise Buyer, a Silicon Valley IPO consultant told the Journal reporters.