Today: Zynga will pay new CEO Don Mattrick $8 million in cash for his first year and grant him millions in stock, as Zynga shares have shot up in the wake of his appointment. Also: Silicon Valley tech stocks move higher ahead of holiday.
The Lead: Zynga CEO gets $7 million in bonuses, $1 million salary, tons of shares
Zynga committed more than $50 million to new CEO Don Mattrick, according to a regulatory filing released Wednesday, with most of that compensation tied to the San Francisco social-gaming pioneer's damaged stock,
This undated photo provided by GlobeNewswire shows Zynga's new CEO Don Mattrick, right, with Zynga's founding CEO Mark Pincus. (AP Photo/GlobeNewswire) (Uncredited)
which has already rebounded rapidly since the experienced executive signed up for the role.Mattrick immediately received a $5 million bonus for accepting the lead role at Zynga, along with a $1 million annual salary and a guaranteed first-year bonus of at least $2 million. Bigger money comes in the form of stock: Mattrick received $25 million worth of shares based on a stock price of $2.80 as a "make whole" reward for giving up shares that would have vested at Microsoft, where Mattrick headed the Xbox division before leaving for Zynga. More than 90 percent of those shares will vest in the first two years of his
employment, with the rest going to Mattrick on the third anniversary of his start date, which is Monday.Another award of nearly 1.8 million shares will vest after his make-whole shares are awarded, and Mattrick has the option of buying roughly 7.4 million more shares at the $2.80 price during the same time period. In future years, beginning with fiscal 2014, Mattrick could receive bonuses of up to $4 million in cash and $7 million in stock.
The large compensation package is similar to Yahoo's (YHOO) deal for Marissa Mayer, who received $59 million in cash and stock to leave Google (GOOG) and take over the top spot at the Sunnyvale Internet giant nearly a year ago. While her immediate bonus was not as large as Mattrick's, Mayer received more stock rewards as an incentive to boost Yahoo's share price; Yahoo stock has gained more than 60 percent since Mayer came on board.
Zynga likely hopes that Mattrick's leadership will lead to a similar bump in its stock price, which has languished near $3 a share while the company has experienced difficulties finding consistent profits. After posting a slight $4 million in profits during the first quarter and an 18 percent decline in revenues at $263.6 million, Zynga predicted a net loss of as much as $36.5 million for the current quarter and even less quarterly revenue.
The company has already worked to cut costs, chopping nearly 20 percent of its workers in a second round of layoffs and closing offices in other states. By pushing founder Mark Pincus out of the CEO role and bringing in Mattrick, Zynga is hoping that revenues can again head up and push the company to stronger profits by focusing on franchise games that can turn into hits, analysts said.
"We think that Mr. Mattrick will focus the company's efforts on streamlining its operations, right-sizing its staffing levels, and focusing employees on the highest revenue-potential projects," Wedbush Securities analyst Michael Pachter said after Mattrick's hiring this week, later adding, "Mr. Mattrick has a history of accomplishment at Microsoft and Electronic Arts (ERTS), has consistently surrounded himself with capable executives, and has consistently extracted solid performance from his coworkers. We expect him to repeat this history at Zynga."
Arvind Bhatia of Sterne Agee is not so sure Mattrick will be successful, writing "Zynga's business is now dependent on new hits, which have been hard to come by. We believe this is a product issue and not so much a leadership issue."
Investors, however, have shown optimism in the hiring of Mattrick by pushing the stock price up, giving the new executive immediate profits on his cache of stock options. The stock gained 4.6 percent Wednesday to close at $3.42, closing a three-day surge of 23 percent since new of the hiring leaked.
SV150 market report: Shortened session strong for Silicon Valley tech stocks
Wall Street closed early Wednesday to start the July Fourth holiday slightly ahead of schedule, and indexes gained slightly ahead of the day off, led by the Nasdaq's 0.3 percent gain and a 0.4 percent boost for the Dow Jones. The SV150 outperformed the larger indexes, however, with Silicon valley tech companies moving 0.6 percent higher on the day.
Apple (AAPL) continued its rebound, gaining 0.6 percent to $420.80 after hiring a fashion executive to work on "special projects" with CEO Tim Cook. Apple has gained 6.1 percent so far this week after dipping lower than $400 last week following a wave of pessimistic analyst reports.
Google released the first ads for a Motorola Mobility product developed under the Mountain View search giant's reign of the hardware maker, and they seemed to be targeted directly at Apple's recent "Designed in California" campaign. Google shares increased 0.5 percent to $886.43 as the company invested in music-video provider Vevo in a deal that will keep the popular content on YouTube.
Yahoo gained 2.4 percent to $25.59 a day after announcing its second acquisition of the week, and Oracle (ORCL) (up 2 percent to $30.70), LinkedIn (up 3.2 percent to $188.18) and Cisco (CSCO) (up 1.1 percent to $24.59) also experienced strong sessions. After a record-breaking beginning to the week, Palo Alto's Tesla Motors (TSLA) fell 2.2 percent to $115.24.
Up: Zynga, LinkedIn, Yahoo, Advanced Micro Devices, Workday, Oracle, Applied Materials, Cisco, Salesforce, Juniper, Adobe (ADBE), Hewlett-Packard (HPQ), SunPower (SPWRA), Apple, Google, Facebook
Down: Tesla, Electronic Arts, SolarCity, Pandora, Gilead, Symantec, eBay (EBAY), Netflix
The SV150 index of Silicon Valley's largest tech companies: Up 7.48, or 0.6 percent, to 1,247.94
The tech-heavy Nasdaq composite index: Up 10.27, or 0.3 percent, to 3,443.67
The blue chip Dow Jones industrial average: Up 56.14, or 0.38 percent, to 14,988.55
And the widely watched Standard & Poor's 500 index: Up 1.33, or 0.08 percent, to 1,615.41
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.
The Lead: Zynga CEO gets $7 million in bonuses, $1 million salary, tons of shares
Zynga committed more than $50 million to new CEO Don Mattrick, according to a regulatory filing released Wednesday, with most of that compensation tied to the San Francisco social-gaming pioneer's damaged stock,
This undated photo provided by GlobeNewswire shows Zynga's new CEO Don Mattrick, right, with Zynga's founding CEO Mark Pincus. (AP Photo/GlobeNewswire) (Uncredited)which has already rebounded rapidly since the experienced executive signed up for the role.Mattrick immediately received a $5 million bonus for accepting the lead role at Zynga, along with a $1 million annual salary and a guaranteed first-year bonus of at least $2 million. Bigger money comes in the form of stock: Mattrick received $25 million worth of shares based on a stock price of $2.80 as a "make whole" reward for giving up shares that would have vested at Microsoft, where Mattrick headed the Xbox division before leaving for Zynga. More than 90 percent of those shares will vest in the first two years of his
employment, with the rest going to Mattrick on the third anniversary of his start date, which is Monday.Another award of nearly 1.8 million shares will vest after his make-whole shares are awarded, and Mattrick has the option of buying roughly 7.4 million more shares at the $2.80 price during the same time period. In future years, beginning with fiscal 2014, Mattrick could receive bonuses of up to $4 million in cash and $7 million in stock.
The large compensation package is similar to Yahoo's (YHOO) deal for Marissa Mayer, who received $59 million in cash and stock to leave Google (GOOG) and take over the top spot at the Sunnyvale Internet giant nearly a year ago. While her immediate bonus was not as large as Mattrick's, Mayer received more stock rewards as an incentive to boost Yahoo's share price; Yahoo stock has gained more than 60 percent since Mayer came on board.
Zynga likely hopes that Mattrick's leadership will lead to a similar bump in its stock price, which has languished near $3 a share while the company has experienced difficulties finding consistent profits. After posting a slight $4 million in profits during the first quarter and an 18 percent decline in revenues at $263.6 million, Zynga predicted a net loss of as much as $36.5 million for the current quarter and even less quarterly revenue.
The company has already worked to cut costs, chopping nearly 20 percent of its workers in a second round of layoffs and closing offices in other states. By pushing founder Mark Pincus out of the CEO role and bringing in Mattrick, Zynga is hoping that revenues can again head up and push the company to stronger profits by focusing on franchise games that can turn into hits, analysts said.
"We think that Mr. Mattrick will focus the company's efforts on streamlining its operations, right-sizing its staffing levels, and focusing employees on the highest revenue-potential projects," Wedbush Securities analyst Michael Pachter said after Mattrick's hiring this week, later adding, "Mr. Mattrick has a history of accomplishment at Microsoft and Electronic Arts (ERTS), has consistently surrounded himself with capable executives, and has consistently extracted solid performance from his coworkers. We expect him to repeat this history at Zynga."
Arvind Bhatia of Sterne Agee is not so sure Mattrick will be successful, writing "Zynga's business is now dependent on new hits, which have been hard to come by. We believe this is a product issue and not so much a leadership issue."
Investors, however, have shown optimism in the hiring of Mattrick by pushing the stock price up, giving the new executive immediate profits on his cache of stock options. The stock gained 4.6 percent Wednesday to close at $3.42, closing a three-day surge of 23 percent since new of the hiring leaked.
SV150 market report: Shortened session strong for Silicon Valley tech stocks
Wall Street closed early Wednesday to start the July Fourth holiday slightly ahead of schedule, and indexes gained slightly ahead of the day off, led by the Nasdaq's 0.3 percent gain and a 0.4 percent boost for the Dow Jones. The SV150 outperformed the larger indexes, however, with Silicon valley tech companies moving 0.6 percent higher on the day.
Apple (AAPL) continued its rebound, gaining 0.6 percent to $420.80 after hiring a fashion executive to work on "special projects" with CEO Tim Cook. Apple has gained 6.1 percent so far this week after dipping lower than $400 last week following a wave of pessimistic analyst reports.
Google released the first ads for a Motorola Mobility product developed under the Mountain View search giant's reign of the hardware maker, and they seemed to be targeted directly at Apple's recent "Designed in California" campaign. Google shares increased 0.5 percent to $886.43 as the company invested in music-video provider Vevo in a deal that will keep the popular content on YouTube.
Yahoo gained 2.4 percent to $25.59 a day after announcing its second acquisition of the week, and Oracle (ORCL) (up 2 percent to $30.70), LinkedIn (up 3.2 percent to $188.18) and Cisco (CSCO) (up 1.1 percent to $24.59) also experienced strong sessions. After a record-breaking beginning to the week, Palo Alto's Tesla Motors (TSLA) fell 2.2 percent to $115.24.
Up: Zynga, LinkedIn, Yahoo, Advanced Micro Devices, Workday, Oracle, Applied Materials, Cisco, Salesforce, Juniper, Adobe (ADBE), Hewlett-Packard (HPQ), SunPower (SPWRA), Apple, Google, Facebook
Down: Tesla, Electronic Arts, SolarCity, Pandora, Gilead, Symantec, eBay (EBAY), Netflix
The SV150 index of Silicon Valley's largest tech companies: Up 7.48, or 0.6 percent, to 1,247.94
The tech-heavy Nasdaq composite index: Up 10.27, or 0.3 percent, to 3,443.67
The blue chip Dow Jones industrial average: Up 56.14, or 0.38 percent, to 14,988.55
And the widely watched Standard & Poor's 500 index: Up 1.33, or 0.08 percent, to 1,615.41
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.