Zynga 2015 Annual Report Download - page 29

Table of Contents
Ifwefailtoeffectivelymanageourhumanresources,ourbusinessmaysuffer.*
Our ability to compete and grow depends in large part on the efforts and talents of our employees and executives. Our success depends in a large part upon
the continued service of our senior management team. We have seen significant turnover in our management team in 2015, including the recent resignation of our
prior Chief Financial Officer. Our Chief Executive Officer, Mark Pincus, is critical to our vision, strategic direction, culture, products and technology and the
continued retention of the remaining senior management team is important to our continued development. We do not have employment agreements, other than
offer letters, with our senior management team and a retention agreement with our General Counsel, and we do not maintain key-man insurance for Mr. Pincus or
any other member of our senior management team. The loss of our Chief Executive Officer or other members of senior management could harm our business.
In addition, our ability to execute our strategy depends on our continued ability to identify, hire, develop, motivate and retain highly skilled employees,
particularly game designers, product managers and engineers. These employees are in high demand, and we devote significant resources to identifying, recruiting,
hiring, training, successfully integrating and retaining them. We have experienced significant turnover in our headcount over the last year, which has placed and
will continue to place significant demands on our management and our operational, financial and technological infrastructure. As of December 31, 2015,
approximately 29% of our employees had been with us for less than one year and approximately 56% for less than two years.
We believe that two critical components of our success and our ability to retain our best people are our culture and our competitive compensation practices.
As we operate as a public company, we may find it difficult to maintain our entrepreneurial, execution-focused culture. In addition, our recent operating results and
the current trading price of our Class A common stock may cause our employee base to be more vulnerable to be targeted for recruitment by competitors. Some of
our employees may have been motivated to work for us by an expectation that our Class A common stock would be trading at a higher value and may be less
motivated by the equity compensation they receive as a result. Competitors may leverage any resulting disappointment as a tool to recruit talented employees.
Competition for highly skilled employees is intense, particularly in the San Francisco Bay Area, where our headquarters is located. If we are unable to retain our
senior management team and our key employees, are unable to continue to hire highly skilled employees our business could be harmed. Moreover, if our team fails
to work together effectively to execute our plans and strategies on a timely basis, our business could be harmed.
We have historically hired a number of key personnel through acquisitions, and as competition with other game companies for attractive target companies
with a skilled employee base increases, we may incur significant expenses in continuing this practice. In addition, our recent operating results, the decline in our
revenue and the current trading price of our Class A common stock may negatively impact our perceived reputation and make it more difficult and more expensive
to recruit new employees. The loss of talented employees or the inability to hire skilled employees as replacements could result in significant disruptions to our
business, and the integration of replacement personnel could be time-consuming and expensive and cause additional disruptions to our business. If we do not
succeed in recruiting, retaining, and motivating our key employees to achieve a high level of success or if we do not attract new key personnel, we may be unable to
continue to launch new games and enhance existing games, including in each case on mobile, expand our network, or execute our business strategy, and as a result,
our business may suffer.
Ourcorevaluesoffocusingonourplayersfirstandactingforthelong-termmayconflictwiththeshort-terminterestsofourbusiness.*
One of our core values is to focus on surprising and delighting our players, which we believe is essential to our success and serves the best, long-term
interests of Zynga and our stockholders. Therefore, we have made in the past and we may make in the future, significant investments or changes in strategy that we
think will benefit us in the long-term, even if our decision negatively impacts our operating results in the short term. For example,
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