Zynga’s Mark Pincus Grabbing Game Oversight from COO

Zynga’s founder and CEO, Mark Pincus, has begun overseeing the company’s game development, as the leader in social gaming scrambles to recover from a disastrous second quarter.

As part of restructuring, David Ko, Zynga’s chief mobile officer, and Steve Chiang, its EVP of games, will report directly to Pincus, according to Bloomberg, which first reported the changes.

Ko and Chiang previously reported to COO John Schappert, one of Zynga’s priciest — and most prized — recruits from Electronic Arts.

Update: Zynga provided an official statement this morning: “We can confirm that in order to unify our company around a multiplatform approach, we reorganized our teams in July to integrate web and mobile groups. These groups are led by David Ko, our Chief Mobile Officer and our EVP of Games Steve Chiang, who are overseeing our game divisions, our Chief Operating Officer John Schappert overseeing our day to day business operations and our CTO Cadir Lee, overseeing our new Platform division; all of whom report to our CEO Mark Pincus. Our players expect their favorite games on every platform and we want to unlock everyone in the company to continue moving quickly against the multiplatform opportunity.”

However, Bloomberg’s report suggests that Schappert has “lost support within the company and taken some of the blame for underperformance.”

According to sources that spoke to AllThingsD, the situation is more complicated than that, as the statement issued this morning suggests.

While at least one source agrees with the assessment that Schappert is in the dog house, other sources say the main purpose of the reorg is to make games work across multiple platforms by prioritizing mobile. That has been challenging for Zynga, since up until now it was easy to make increasingly more money on Facebook. Plus, as the founder, Pincus has always closely overseen game development, and at times continues to hold the title of Chief Product Officer.

More evidence that there continues to be a blurring of the lines is that Ko is now overseeing key game franchises on Facebook — not just mobile, insiders tell AllThingsD. By giving Ko more control, Pincus is obviously serious about helping the two game silos work closely together.

But going forward, it’s unclear what role Schappert is playing now.

As yet another example of his diminishing role, sources close to the situation say Schappert is no longer heading up the company’s ad technology, which has been handed off to Cadir Lee, Zynga’s CTO. The list of things that Schappert is responsible for is now relatively small, especially in comparison to the size of his paycheck.

A year ago in April, when Zynga first lured him away from EA, his compensation was valued at $42.8 million, according to Bloomberg’s estimates.

Last week, the company wildly missed its internal projections, blaming a number of woes, including changes made to the Facebook platform. In an interview with Schappert immediately following earnings, he did not let on that a shake-up was underway, and spoke about a wide range of topics, including the company’s future plans.

Yesterday, Zynga’s shares continued to spiral downward, losing another 2 percent, to close at $2.95 a share. Since raising $1 billion in a public offering late last year, the company’s stock has fallen more than 70 percent. In early trading this morning, shares reached a new low, crashing 3.7 percent to hit $2.84 share.

At this precipitous rate, it didn’t take long for lawsuits to start bubbling up. Following a cratering of that magnitude, shareholders filed a pair of lawsuits against Zynga, accusing the company of failing to warn about declines in user and revenue growth ahead of last week’s surprisingly weak results. The California suits are seeking class-action status, Reuters reports.

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