Zynga 2013 Annual Report Download - page 97

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Table of Contents
otherwise required by law. Delaware law could require either our Class A common stock, Class B common stock or our Class C common stock
to vote separately as a single class in the following circumstances:
Liquidation. Upon our liquidation, dissolution or winding-up, the assets legally available for distribution to our stockholders would be
distributable ratably among the holders of our Class A, Class B and Class C common stock.
Preemptive or Similar Rights . None of our Class A, Class B or Class C common stock is entitled to preemptive rights, and neither is
subject to redemption.
Conversion. Our Class A common stock is not convertible into any other shares of our capital stock. Each share of our Class B common
stock and Class C common stock is convertible at any time at the option of the holder into one share of our Class A common stock. In addition,
after the closing of the initial public offering, upon sale or transfer of shares of either Class B common stock or Class C common stock, whether
or not for value, each such transferred share shall automatically convert into one share of Class A common stock, except for certain transfers
described in our amended and restated certificate of incorporation. Our Class B common stock and Class C common stock will convert
automatically into Class A common stock on the date on which the number of outstanding shares of Class B common stock and Class C common
stock together represent less than 10% of the aggregate combined voting power of our capital stock. Once transferred and converted into Class A
common stock, the Class B common stock and Class C common stock may not be reissued.
Stock Repurchases
In October 2012, our Board authorized a $200 million stock repurchase program. We initiated purchases under this program in December
2012. As of December 31, 2013, we had repurchased $21.1 million of our Class A common stock under our stock repurchase program and the
remaining authorized amount of stock repurchases that may be made under this plan was $178.9 million. In 2013, we used $9.3 million to
repurchase an aggregate of 3.4 million shares of our Class A common stock at an average purchase price of $2.74 per share.
Warrants
In June 2011, in connection with a service arrangement with a related party, we issued a warrant to purchase 1.0 million shares of our Class
B common stock at an exercise price of $0.05 per share. We determined the fair value of the warrant using the Black-Scholes option-pricing
model and revalued this warrant each quarter as services were performed and expensed the portion of the warrant that vested each period. We
recorded $14.0 million and $1.7 million of expense related to this warrant in 2011and 2012, respectively. In June 2011, the service provider fully
exercised the warrant, and in April 2012, the warrant fully vested.
Equity Incentive Plans and Stock-Based Expense
In 2007, we adopted the 2007 Equity Incentive Plan (the “2007 Plan”) for the purpose of granting stock options and ZSUs to employees,
directors and non-
employees. Concurrent with the effectiveness of our initial public offering on December 15, 2011, we adopted the 2011 Equity
Incentive Plan (the “2011 Plan”), and all remaining common shares reserved for future grant or issuance under the 2007 Plan were added to the
2011 Plan. The 2011 Plan was adopted for purposes of granting stock options and ZSUs to employees, directors and non-employees. As of
December 31, 2013 68.7 million shares of our Class A common stock were reserved for future issuance under our 2011 Plan. The number of
shares of our Class A common stock reserved for future issuance
93
•
If we were to seek to amend our Certificate of Incorporation to increase the authorized number of shares of a class of stock, or to
increase or decrease the par value of a class of stock; and
•
If we were to seek to amend our Certificate of Incorporation in a manner that altered or changed the powers, preferences or special
rights of a class of stock in a manner that affected its holders adversely.