independent

Thursday 17 April 2014

Zuckerberg will sell off shares to cover tax bill

Mark Zuckerberg

FACEBOOK founder Mark Zuckerberg will sell 41.4 million shares worth about $2.3bn (€1.68bn) to pay a tax bill.

The Facebook CEO, pictured right, whose remaining shares are worth more than $50bn (€36bn), made the announcement yesterday morning.

Facebook shares have doubled in value this year but they fell 4pc following the move.

Mr Zuckerberg's sale will reduce his voting power to 56.1pc from 58.8pc, the company said.

Facebook said it expects Mr Zuckerberg to use most of the net proceeds from the sale to satisfy taxes related to the exercise of an option to buy 60 million Class B shares.

Each Class A share is entitled to one vote, while Class B shares are entitled to 10 votes and are convertible at any time into one Class A share.

Board member Marc Andreessen will also sell 1.65 million Class A shares, while Facebook will sell 27 million. The follow-on sale is the first that it has filed for since its May 2012 initial public offering.

The move came a day before Facebook joins the Standard & Poor's 500 Index, an event that triggers demand from index funds and other institutions to own a company's stock. S&P had announced that as of the close of trading on December 20, it plans to include Facebook's Class A common stock in the S&P 500 Index.

"It's never a positive sign when insiders are dumping massive quantities of stock," said Todd Lowenstein, of Highmark Capital, which oversees about $19bn in assets. Yet "the company is now being added to the S&P 500 Index, so there will be large demand for the shares from index-buying and index-hugging money managers". It should be absorbed without much disruption, he added.

Facebook said it would use the proceeds for working capital and other corporate purposes.

Along with a share sale for tax purposes and a charity contribution last year, the CEO has sold or gifted about 20pc of his stake. Mr Andreessen's sale in the follow-on offering forms 35pc of his 4.6 million Facebook shares.

The company's joining of the S&P 500 cements a comeback for it after its stock plunged in the wake of its IPO.

The world's biggest social-networking firm has since introduced numerous mobile advertising products, as its more than one billion members shift to using the service on smartphones and tablets.

This week, it said it was testing video ads that automatically play in users' news feeds, in a bid to catch up with other websites offering online ads. The first promotions are starting to run this week.

Irish Independent

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