The Zynga IPO: Who Owns What, Who Makes What
Having teased the markets and numerous reporters for several days, online gaming company Zynga finally dropped its S-1 filing with the U.S. Securities and Exchange Commission just as the nation was getting ready for the long July 4 holiday weekend.
The plan is to raise as much as $1 billion at an implied valuation of $10 billion, though The Wall Street Journal, citing people close to the situation, says the offering could raise as much as $2 billion and value the company at $20 billion. The company didn’t give a price range but said it had 562.5 million shares of Class B common stock as of March 31, plus an additional 20.5 million shares of class C stock.
The big number that everyone is going to focus on is the value of the $43 million compensation package going to executive VP and former Myspace CEO Owen Van Natta. That includes nearly $29 million in options and more than $14 million in stock awards. His base salary is $77,000 a year and he earned a $48,000 bonus is 2010.
Behind Van Natta was Steve Chiang, co-president of games, whose total compensation was north of $28 million, including $25.7 million in stock and a $2.9 million bonus. The bonus included more than $600,000 in a relocation bonus, the filing says.
Another big earner is CFO David Wehner, whose package is worth $18 million, $16 million coming from stock awards and $1.8 million paid in a bonus. Half a million of that was a retention bonus.
So who owns what? Founder and CEO Mark Pincus owns a big piece of the action. The filing shows he owns 91.4 million shares, or about 16 percent, of the Class B stock, and 20.5 million shares of the Class C stock. Both classes of stock are convertible into Class A common shares. Assuming the Journal’s sources are right and Zynga is worth $20 billion, then Pincus’s stake should be worth $3.2 billion on the Class B shares alone. (I’m not sure exactly how the Class C shares work into the calculation, but Pincus is the only one who has any, except for a block of 5.3 million shares that were sold to a bunch of mutual funds let by Morgan Stanley.)
Pincus, incidentally, is not only founder and CEO, but also Zynga’s landlord. The filing shows that the company leases office space he owns and paid him $500,000 in 2009 and $400,000 in 2010. The lease puts the current rent on the office space at $28,000 a month. Zynga also reimbursed Pincus $25,000 in 2009 and $120,000 in 2010 for the use of his personal plane, on occasions where he uses it for business travel.
Venture Capital firm Kleiner Perkins holds 11 percent, or slightly more than 64 million, of the Class B common shares. That works out to a stake worth $2.2 billion, assuming the $20 billion valuation.
Other venture funds with a piece of Zynga: Institutional Venture Partners, which owns 34.3 million shares, or 6.1 percent of the equity, worth $1.2 billion. Foundry Venture Capital and Avalon Ventures also have 6.1 percent of equity, or another $1.2 billion each. Union Square Ventures has a stake worth 5.5 percent, or $1.1 billion. And Russia’s DST Limited has a stake at 5.8 percent, worth $1.16 billion.
The filing says that Zynga has raised $845 million in three rounds of funding, though the filing makes it look like some rounds were closed in smaller increments. Other funds and individuals known to have invested — but not listed as major shareholders in the filing — include Andreessen Horowitz, the Pilot Group, Tiger Global Management, and Peter Thiel, head of Clarium Capital, according to its Web site.
Reid Hoffman, the former LinkedIn CEO who’s also a Zynga director, has 3.1 million shares, which amounts to less than 1 percent of the equity, though elsewhere in the filing, the value of stock awards as a director is valued at $9.5 million, assuming a grant price of $6.435 per share on the date of the grant.
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