As expected, Zynga filed today to raise an additional $400 million in a secondary stock offering. One thing that caught my eye was a reference to founder and CEO Mark Pincus under the section of employee benefits:
“In addition, in 2011, due to specific threats relating to the personal security of Mr. Pincus and his family, we provided Mr. Pincus with certain security protection.”
Those threats must have been pretty serious, because according to a footnote, the company spent $1.169 million on security for Pincus:
“Includes payments made in connection with security provided to Mr. Pincus and his family in 2011. This amount reflects the cost to the Company for business and travel related security protection, as well as costs associated with the purchase, installation and maintenance of home security systems in the amount of $1,169,896, and legal and temporary housing costs incurred in connection with specific security threats. We believe these costs are appropriate business expenses.”
The filing doesn’t elaborate on the nature of those threats.
The company spent $69,587 on security for Pincus and his family in 2010. In previous filings, the company had noted that it paid for security services in 2010:
“In 2010, we paid for certain security services for Mr. Pincus. We believe these expenses are reasonable and appropriate, consistent with expenses covered by other companies for their chief executives and in the best interest of the company and its stockholders.”
But at least from the tone of the additional disclosure and the massive increase in security spending, it would seem the threats were perceived as real and even more serious than they had been.
In the filing today, the company goes on to say:
“The nature and extent of the security services provided to Mr. Pincus were based on the recommendations set forth in an independent third-party security study. The security services we provide are reviewed periodically to ensure that they provide appropriate levels of safety, security and accessibility for Mr. Pincus and safety and security for his family where appropriate. We believe that these security services are a necessary business-related expense and are not provided to Mr. Pincus with compensatory benefit or intent.”
Such security is typical for many CEOs of big companies, people like Larry Ellison of Oracle, who received $1.5 million worth of home security technology and staff in 2011. But I hadn’t yet heard of such issues with smaller public companies like Zynga, or start-ups.
But given Pincus’ importance to the company, it would seem the company felt compelled to ensure his protection.