Zynga Chief Operating Officer Schappert Resigns After Revamp

Zynga Inc. (ZNGA) Chief Operating Officer John Schappert is resigning and leaving the board after he was stripped of some responsibilities at the company, the biggest developer of games played on Facebook Inc. (FB)’s social network.

Schappert, whose departure was announced in a Zynga regulatory filing yesterday, had lost his role overseeing game development in a reorganization that was aimed at reviving growth and making more money from mobile services, people with knowledge of the matter said last week.

Chief Executive Officer Mark Pincus embarked on the overhaul in early July, the people said, at the close of a quarter marked by slowing sales growth. Schappert, lured away last year from Electronic Arts Inc. (EA) with a pay package worth $42.8 million, had lost support within the company and taken some of the blame for its underperformance, the people said. Zynga may suffer for the loss of a gaming veteran, said Michael Pachter, an analyst at Wedbush Securities Inc.

“Allowing the only seasoned industry executive on your management team to leave is not going to generate greater confidence among investors,” said Pachter, who is based in Los Angeles. “They certainly have lost a tremendous amount of adult supervision. I think that’s a mistake.”

Photographer: Jeff Chiu/AP Photo

Zynga chief operating officer John Schappert speaks at a Zynga event in San Francisco. Close

Zynga chief operating officer John Schappert speaks at a Zynga event in San Francisco.

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Photographer: Jeff Chiu/AP Photo

Zynga chief operating officer John Schappert speaks at a Zynga event in San Francisco.

Seeking Hits

The blame for Zynga’s troubles falls on the entire management team, not just Schappert, according to Pachter and Arvind Bhatia, an analyst at Sterne Agee & Leach Inc. in Dallas. The company hasn’t been able to create a hit to make up for aging games like “FarmVille,” the analysts said. With a tenure lasting less than a year and a half, Schappert didn’t have enough time to make a significant impact, they said.

“The strategy that Zynga has is not working,” Bhatia said. “This is supposed to be a long-tail business, and it hasn’t proven to be.”

Zynga shares rose 2.1 percent to $3.01 at the close in New York. The stock has dropped 70 percent since the company’s initial public offering on Dec. 15, when it sold shares at $10 each.

Schappert’s exit from the board wasn’t because of any disagreement with the company or its policies or practices, Zynga said in the filing. His resignation is effective immediately.

“John has made significant contributions to the games industry throughout his career and we appreciate all that he has done for Zynga,” Pincus said yesterday in an e-mailed statement. “John leaves as a friend of the company and we wish him all the best.”

To contact the reporter on this story: Mark Milian in San Francisco at mmilian@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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