Restricted Facebook stock grants vest

Facebook CEO Mark Zuckerberg, COO Sheryl Sandberg and other Facebook emplyees celebrate Facebook IPO Friday, May 18 at the company's Menlo Park headquarters. (Zef Nikolla)
October 25, 2012 7:13:09 PM PDT
It was a lucrative day for some of the early employees at Facebook. Their restricted stock shares vested Thursday -- that means a bunch of instant millionaires.

It's the reward for joining a company at the very beginning when no one was sure of its prospects. No one knows exactly how many overnight millionaires will be created, but it will definitely create two groups at Facebook -- the haves and the have-nots.

Those seeing their restricted stock units vest Thursday had to satisfy two conditions: they had to work at Facebook for four years and they had to wait for six months after the IPO. Those who joined Facebook early on have the greatest reason to beam.

"Anyone before 2009 I would say definitely becomes an instant millionaire," Santa Clara University professor Robert Hendershott, Ph. D., said. "People who joined in 2010, I would not assume that they're all instant millionaires."

They can start selling their stock on Monday, but that's up to them.

"Understand, a lot of these people know more about the company than you and I know, and they may be working on projects, things that they can see it's heading the right way, so they may not sell very much at all because this move to mobile is very important to them, and it looks to me like they've taken a good first step," Raymond James Investment Vice President David Lucas said.

On the other hand, some newly vested employees may sell part, or all, of their stock in order to diversify their investments.

It's very likely employees are turning to Facebook or to outside consultants for advice on what to do with their overnight wealth.

"I'm sure they've had people throwing themselves at them; financial advisers make their money by helping people with money, and Facebook employees are a great opportunity," Hendershott said.

Facebook is also helping cushion employees on their tax liability. It's holding back 120 million shares to cover almost $2 billion they would otherwise have to pay in capital gains.

Buying a house or a car, or taking a dream vacation might be in the cards. But wealth can also enable instant millionaires to create their own start-ups or to embrace philanthropy. That could pose a challenge for Facebook.

"After a year or two, they start thinking about doing their own thing because they can; so it's going to be difficult for Facebook to really make sure they retain that early talent that they had," Zend CEO Andi Gutmans said.

One person we know who will not be selling stock Monday is Facebook CEO Mark Zuckerberg. He has said he won't, and he is considering not selling any until a year from now.


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