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Zynga shuffle casts out John Schappert

August 08, 2012|By Alex Pham
  • John Schappert at a Zynga news conference at the San Francisco company's offices.
John Schappert at a Zynga news conference at the San Francisco company's… (Jeff Chiu )

Zynga has shuffled its deck in a management reorganization and tossed out its chief operating officer, John Schappert.

The move came Wednesday after a turbulent two weeks in which Zynga saw its stock fall to record lows after a disappointing second-quarter financial report and was smacked with two lawsuits.

"John has made significant contributions to the games industry throughout his career, and we appreciate all that he has done for Zynga," Mark Pincus, Zynga's chief executive, said in a statement. "John leaves as a friend of the company and we wish him all the best."

Hired just 16 months ago, Schappert arguably was Zynga's highest-profile recruit from the world of traditional video games. To woo him away from his previous post as chief operating officer for Electronic Arts, Zynga awarded Schappert a compensation package worth close to $53 million over three years.

Schappert left eight months before the full term of his contract, but was able to collect some of that pay, including a grant of 1.4 million shares of Zynga's stock, plus $4 million in cash, in addition to a $300,000 annual salary, according to an employment agreement dated July 2011. Exactly how much he walked away with depends on how many shares he has sold and at what prices.

Under Zynga's new regime, Cadir Lee, David Ko and Stephen Chiang will report to Pincus. Lee, Zynga's chief technology officer, will be in charge of the company's publishing platform. Ko and Chiang will head up Zynga's game development.

Analysts say the decision to ax Schappert is unlikely to solve Zynga's more fundamental problems -- a shift toward more serious games on Facebook and a migration of players toward mobile devices, where Zynga does not have a strong presence.

"There is a movement from activity-based games to more in-depth, immersive games, and Zynga hasn't been focused on the latter," said P.J. McNealy, a media consultant with Digital World Research in Boston."Plus, the sands of its Facebook relationship have shifted, which is likely causing a strain. One employee would likely not be able to solve both of those issues quickly, and patience runs thin with a sinking stock price."

Zynga's shares lost 6 cents to close at $2.95 Wednesday prior to the company's management changes. The stock price slipped a further 3 cents in after-hours trading following the news. Zynga had debuted on the stock market in December at $10 a share.

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Twitter: @AlexPham

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