The Employee Stock Fire Sale ON at FaceBook?
At Facebook’s Menlo Park headquarters this Monday morning, people are probably giving David Spillane some knowing looks.
After a long career at Ernst & Young with a stopover at Juniper Networks, Spillane became Facebook’s chief accounting officer in 2009. He was given a big chunk of restricted stock units, a rich compensation package that promised great fortune and 416,479 vested Facebook shares by the fall of 2012. At Facebook’s IPO price of $38 in May, those shares were worth $15.8 million, but by Halloween, after Facebook’s big stock drop, those shares were worth $8.76 million.
Sheryl Sandberg, COO of Facebook (Photo credit: jurvetson)
Still, Spillane did not wait to cash-in his shares for whatever he could fetch for them in the open market. On Wednesday, the very first day that Spillane could sell his shares after they were freed from their lock-up restrictions, he sold big time. Spillane sold 256,000 of his Facebook shares for just over $21, more than 60% of the Facebook shares that he currently owns, and he pocketed $5.38 million. His stock sale was disclosed in a Securities & Exchange Commission filing made public after the markets closed on Friday.
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(Photo credit: jurvetson)
The Facebook employee stock dump is on and Spillane, who is intimately aware of the company’s financial outlook, is rushing for the exits and setting an ominous tone. Lock-up restrictions expired on 230 million Facebook shares belonging to employees last week. Sheryl Sandberg, Facebook’s chief operating officer and a member of the company’s board who joined the company from Google in 2008, also sold some stock last week, $7.4 million worth. Theodore Ullyot, Facebook’s general counsel who was the chief of staff for U.S. Attorney General Alberto Gonzalez during the Bush Administration and once worked for AOL, sold $3 million of Facebook stock.
It’s not surprising at all that Facebook employees are cashing-in quickly, although the size of Spillane’s big sale is a bit alarming. Peter Thiel, Goldman Sachs and hedge fund star Chase Coleman, who all sold huge amounts of Facebook stock the first chance they got, should have made it clear to anyone who was paying attention that there would be a lot of fast insider selling. The recent insider-sales induced pressure has caused about half of the lift that Facebook’s shares got after the company reported more promising third-quarter earnings to disappear. With another 777 million Faceboook shares coming off their lock-up restrictions next week, this stock dump will continue for much of the rest of the year.
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