Does anyone know why, as a Facebook employee, Mark Zuckerberg is not subject to the same 90-day lockup period for disposing of his shares on the public market as the rest of the employees?
EDIT: The lock-up period isn't an SEC requirement; it's an agreement made with the underwriters. The S-1 filing states:
"Morgan Stanley & Co. LLC may, in its sole discretion, permit our executive officers, our directors, and the selling stockholders to sell shares prior to the expiration of the restrictive provisions contained in the “lock-up” agreements with the underwriters."
In effect, Zuckerberg just took an enormous salary in the form of exercising options. He has to pay tax on that income.
Let's say he exercised options that earned him $5BB. (I don't know what the exact amount was. It was in the billions, no doubt.) So let's say maybe he owes $2BB in taxes. As for the rest of his shares and what they are "worth", those are going to fluctuate in value, based on the company's performance.
Now, let's say you are a FB shareholder. Ask yourself as a shareholder if the FB CEO has earned a $5BB salary. What has he done for you? How is your FB stock doing? OK, so let's say you think he is a genius and certainly deserves $5BB. Then ask yourself why he would want $5BB in income in _one year_. He wants it all right now. That's an awful lot of income. And a lot of tax to pay.
Why the rush to cash out?
Whatever happens to Facebook, he is set for life. Good for him, but not necessarily good for Facebook shareholders. He has little incentive to deliver.
Wall St. is going to love him, I can already tell.
He's worth about 26 billion, I'm pretty sure that even if he cashes out 5 billion that is still plenty of incentive to deliver. He's waited 8 years, I don't consider that a "rush" to cash out.
One might argue the eight years of waiting was simply to get to this point, when income had reached its peak ($1BB), and where FB could IPO and certain parties could extract maximum profit. The "rush" is cashing out just as the company opens its books to the public.
If FB revenues continue to go up, then I'm wrong. But unless Facebook "finds" a novel business model I do not see revenue continuing to climb; I believe we are at the peak, and now begins the descent. If he waited eight years, then why not wait a little longer? I believe there is a reason now was the time. Time will tell.
