
Mark Zuckerberg sells 30.2 million shares of $FB common stock at $37.58 - bond
http://www.sec.gov/Archives/edgar/data/1326801/000120919112029812/xslF345X03/doc4.xml
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keltex
It was in the S-1 filing, so it's not new news:

[http://www.marketwatch.com/story/facebooks-zuckerberg-
thiel-...](http://www.marketwatch.com/story/facebooks-zuckerberg-thiel-sell-
shares-2012-05-22)

~~~
danielweber
I remember back in the 90's that every time Bill Gates sold 1 or 2 percent of
Microsoft, people would freak out that Microsoft's collapse was imminent. Even
though he did it every six months.

Whatever you think of Facebook, it is extremely prudent for Zuckerberg to
diversify. If he had $1 million in non-FB assets, he would still have 99.99%
of his assets in Facebook. That's a crazy amount of his wealth concentrated in
one stock.

~~~
calinet6
Arguably, that's the whole point in owning stock in the company you own,
control, and oversee. You can help make it go up and it's in your complete
interest to help it become successful. You have no such control or incentive
with other companies.

~~~
bonzoesc
When you've got hundreds of millions of shares, you can sell tens of millions
without losing ownership. At the same time you also insulate yourself from the
risk of you or somebody who works for you fucking everything up.

~~~
sirteno
Not just that but also macro variables that affect the performance of the
equity markets as a whole... He is being prudent in diversifying a fraction of
his exposure away not just of FB, but also from the asset class and perhaps
even the currency / country.

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ck2
Every three cents more per share would have been another million dollars.

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Cushman
You know what's cool? 1.134916 billion dollars.

Hey, who else has finances that look like this?

    
    
      Mark Zuckerberg, Trustee of The Mark Zuckerberg 2008 Annuity Trust dated March 13, 2008

~~~
frankydp
This is pretty common when someone has a lot of cash that is liable to capitol
gains. If you sell the assets to the pat you can pay the taxes over time on
the money that is distributed instead of paying the capitol gains all at once
and loosing that earning power. You do loose the money in that it you cant use
it but you make more money in the long run because you spread the taxes out
and make money on the potential tax liability up until it is distributed.

edit: It is the same as not paying any taxes all year on your payroll and
putting the money in the market to make the interest you can, and then paying
the tax man in April.

edit typo

edit adding typos back in

~~~
ibejoeb
Careful. Taxes in the US are pay-as-you-go. You can't just "pay the tax man in
April." Well, you can, but you also have to pay him the penalty for failing to
pay throughout the year. See <http://www.irs.gov/taxtopics/tc306.html>.

~~~
techiferous
The "penalty", as I understand it, is neither a fine nor a record of
wrongdoing, as paying at the end of the year is not illegal. The penalty is
the IRS saying that it would like to have the interest back that it otherwise
would have earned if you had paid earlier.

As far as I understand, it's perfectly kosher to wait until the end of the
year to make payments; you just have to make sure you have the money to
actually pay then.

Disclaimer: I am not an accountant nor do I have expertise on this matter.

~~~
ibejoeb
It's a little more complicated than that, and it is a penalty. You may also
owe interest, and they are two separate things (and interest is statutory, so
you're really not negotiating there). There are multiple penalties for
underpayment and nonpayment of federal taxes. If you're an employee and not
withholding enough (because you have other income or AMT for example), you
should be making estimated payments to cover the difference. Your employer is
also subject to penalties if it fails to withhold and pay the gov't employment
taxes (social security and medicare), and it's usually 100%. If you are self-
employed, you need to make estimated payments.

tl;dr: the gov't has cashflow problems, too, and doesn't like to issue t-bonds
to finance its receivables.

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rdl
I believe most of that was sold specifically to pay the taxes he owed. Not all
of his holdings were just subject to long term capital gains (deferred until
realization). Some were some kind of RSU or option like deal which were
taxable at the IPO.

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alvarosm
I'd sell all of it and move on. Most boring business ever. And it's not like
it's going to be worth more, ever, anyway.

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albertsun
Probably to pay his tax bill, right?

~~~
tosseraccount
No. His stock was near zero when he acquired (created) them. He'll pay full
cap gain rates when he realizes them (which is 15% cap gains rate which is not
too bad for him; I pay a lot more on my labor gains). He owes no tax until
then. If you received stock worth , say, one million , you might want to sell
1/3 to pay the tax. Otherwise if stock price goes to zero you've got a million
in losses to write off which is hard to do without a million in gains to
offset it.

~~~
its_so_on
(EDIT: I don't know anything about this subject, the below is only a naive
question. See response.)

are you sure about this. to me it's pretty obvious that if you receive a
million dollars in stocks and, say, 48 hours later it goes to 0, then insofar
as you owed taxes on the million due immediately, you have also just lost a
million in taxable income; so you write the million loss off of the million in
gains for net 0 increase or decrease in your taxable amount due to this gain-
and-loss.

I know the IRS can be daft, but surely if you lose the exact amount you just
got, then you've just netted nothing, taxable at your marginal tax rate on
that gain for that type of gain, times nothing = nothing.

~~~
asmithmd1
You absolutely owe the tax on the income - I personally know people who got
bit by this.

It was your choice to let your bet ride by keeping it in the stock.

You can use the capital loss to off-set capital gains but you owe income tax
on money you make when cashing out options.

~~~
its_so_on
Wow. All I can say is, "Are you sure?" How was it "your choice to let the bet
ride." I mentioned a very short window - what if you were hospitalized between
receiving the security and being able to dispose of it because you didn't want
to keep it?

How can a type of income possibly be in a different bucket from loss of that
very type of income?

This doesn't make any sense to me.

~~~
tedunangst
Go read the tax code. The magic section you're looking for is Alternative
Minimum Tax (AMT).

~~~
metamatt
It's not so simple as a magic section; AMT may or may not apply.

If you got the stock as a gift, or (more likely in this startup context) an
RSU grant, the entire value is taxed as ordinary income at the time you
receive the shares. I don't think there's any special AMT treatment here.

If you purchased the stock using NQOs (non-qualified options), the difference
between the strike price and fair market value is taxed as ordinary income at
the time of purchase, and again I don't think there's any special AMT
treatment.

If you purchased the stock using ISOs (incentive stock options), then you have
to watch out for AMT -- under normal rules, you don't owe tax at time of
purchase, and when you sell, if you held long enough, the gain from strike
price to FMV at purchase time may be taxed as capital gains. _But_ under AMT
rules, the purchase is a taxable event, and you may owe tax at exercise time.

Under any of these, if you exercise (or are gifted) shares and hold them and
they decline, you may end up owing taxes on the higher on-paper value that
never meant real money to you, and this ends up feeling unfair. But this case
is generally obvious enough you would see it coming, except in the ISO+AMT
case which is much less obvious, and this difference is what screwed a lot of
people in the 2000-era bubble burst.

Normal disclaimer: I'm not a lawyer or accountant, there are many more details
that apply here, and you need to figure out what applies to you before making
any important decisions. But I believe the above is basically true.

------
dageshi
Ummm does anyone else think that maybe Mark Zuckerberg is now going to be
filling the Steve Jobs shaped hole in the worlds tech publications?

~~~
tomelders
I'm going to say no. I really don't see Facebook being around in 30 years. I'd
be surprised if they're not marginalised in 10 years. And other than Facebook,
I'm not sure what Zuckerberg has to offer the world.

If you want to know why: It's because I personally believe the future of
social networks is to niche, with disparate social networks connected via a
Distributed Social Networking Protocol. Your social network account will be
more like your email account. I think Facebook will find itself on the wrong
side of history when that battle starts by trying to lock down it's data and
lock people into Facebook.

That's just my belief and I'm open to the possibility that it could be
completely wrong, so don't go crazy with the down votes.

But if we're just talking about the next 12 to 24 months, then, oh yes, of
course he will.

~~~
mukaiji
There's certainly a lot of truth here. However, Mark Zuckerberg built the
company to last. So I think it's unlikely that it will completely be
marginalized.

Regarding the Zuck = Jobs. Absolutely not. Yes, they are both product people.
But Mark Zuckerberg does not have the same aura or doesn't necessarily have
the same depth of intellectuality that Jobs (college dropout or not) had. When
I see Mark Zuckerberg, I think more of the Bill Gates or our time than an
artistic genius with deep root in counter-culture lifestyle.

~~~
oh_sigh
" Mark Zuckerberg built the company to last. So I think it's unlikely that it
will completely be marginalized."

Really great point. I love the reasoning you give to back up your arbitrary
statements.

~~~
Drbble
He lacks the intellectual depth.

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mck-
On the day of the transaction, the stock was trading around 32 with the day
high at 33.57 -- how was he able to offload half of a trading days volume at
such a premium?

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knodi
I thought employees of facebook can't sell for 6months after the IPO. Is this
not true?

~~~
ceejayoz
Key word: employees.

~~~
knodi
Isn't CEO technically still a employee of the company.

~~~
bcherry
Those restrictions are usually not defined in blankets based on role, rather
they're written into the stock option agreements at time of grant. Presumably,
Zuck and others don't have that clause, at least not on all of their shares.

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mladenkovacevic
Good for him. Will he be as driven and as emotionally invested in his product
as he used to be now that he's officially a billionaire? Just got married,
maybe kids on the way soon, and he's got the means to lead a much more
comfortable life... will Facebook slide down on his priority list?

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blahedo
I figured that's why he held on to >50.1%, so he could sell some and still
maintain control.

~~~
kristianc
His Class B shares should take care of maintaining control.

~~~
tosseraccount
The FB shares aren't voting shares or are extremely diluted voting shares?
This is the same scam Google and UPS pulled. Beware of owning second class
stock shares. It means that someday the insiders can wave a magic wand and
screw you over. Do you trust them? Maybe. But it doesn't mean they can't do
what they want and "share holders" can't do a thing about it.

~~~
nknight
They're diluted, or his are inflated, however you want to look at it. Yes,
it's similar to the Google structure, but Google isn't the prototype. Lots of
companies over the years have had special shares with extra voting power,
families often retain voting control of a company long after they've sold off
most of the equity.

I'm always divided on this as a shareholder, but more often than not I do
trust the founders more than the open market, yes. They have an emotional
stake in the company that goes beyond short-term economic interests, and I've
seen enough companies flounder after the market jettisons the people who built
it, and enough recoveries when the founders return, to question the wisdom of
shareholder power.

~~~
tosseraccount
Power to the democratic shareholder masses! Down with monarchism in the board
room!

Seriously. If the founders don't want shareholders mucking with their
property, then don't go public. Stay private.

~~~
Bootvis
Founders are not forced to make this choice as exemplified by the GP.

If you don't like founders keeping control, don't buy their shares.

------
SagelyGuru
Dividing the FB valuation by the number of its active users tells us that he
has made approximately $170 out of each user.

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sirteno
In my opinion, Mark Zuckerberg's decision is a prudent and rational one. He is
diversifying a heck of a lot of exposure away from a stock that is now at the
mercy of the public equity markets. Besides, in relative terms, he is still
retaining the vast majority of his wealth tied to Facebook stock.

His performance as a CEO is essential to ensuring solid performance for the
company, but the stock price - like every other public share - is now at the
mercy of macro variables that affect the performance of the equity markets as
a whole...

Mark Zuckerberg is being prudent in diversifying a fraction of his exposure
away not just from FB, but also from the asset class and perhaps even the
currency / country.

C'mon, is anyone here willing to admit that they would not cash-out a small
fraction of $18 bn tied to a single stock if you had the ability to do so??

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cjdentra
Let's hope that Mr. Zuckerberg does something for the greater good.
Opportunities are limitless.

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rafkin98
<http://www.cnbc.com/id/47537683>

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shaydoc
ya see, this is what I don't get about capitalism sometimes.

I mean what do you do with such an astronomical figure of money like that as
an individual ?

~~~
eatporktoo
Nearly anything you want

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ahalan
what's his email? I have a great idea for a new startup

~~~
mjhagen
thezuck@hotmail.com

~~~
csmeder
Is the question and answer an inside joke? I don't get it.

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rwebb
WTF is a COB?

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duncan
Not news.

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huslage
So what.

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a3d6g2f7
Selling off significant amounts of stock, for tax purposes, in the company you
work for is not something one typically does _before the company has even gone
public_.

Insiders were dumping their stock in the days leading up to the IPO.

What does that say about their perceived value of the company over the long-
term?

Nothing, of course. Yes, that makes perfect sense.

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jsavimbi
He needs walking around money. So what?

~~~
thrownaway2424
Well, a billion is a lot of walking around money. If he just cashed out for no
particular reason, it would point to a lack of faith in the growth prospects
for Facebook. After all if you owned a billion dollars of a stock that you
thought was a rocketship, wouldn't you leave it in and turn it into five or
ten billion?

Of could it could be he wanted to spread his risk around, or pay his taxes.

~~~
frankydp
To be specific HE did not cash out. An independently managed PAT cashed out.

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foxhop
30200000 * 37.58 = $1,134,916,000.00

Didn't Mark spend 1 Billion on the Instagram acquisition?

Did he pay them off with equity? Why did he spend so much on instagram?

~~~
dsl
Mark Zuckerberg didn't buy Instagram. Facebook did. They are not the same.

~~~
foxhop
It was Facebook's money, sure, but Mark bought instagram. Do you have insight
on my questions?

~~~
hluska
Before I begin, I'm not trying to troll you and am certainly not trying to be
disrespectful. However, cashing out $1B of stock and buying a company (which
could turn into a serious competitor) for $1B have absolutely nothing to do
with each other.

The sale of stock was about liquidity, diversity and paying off taxes. It was
the right financial decision (that any advisor worth his/her fees would
recommend).

Finally, Mark Zuckerberg did not buy Instagram. He negotiated the sale on
behalf of a company which he happens to own a controlling interest in.
Legally, Facebook and Mark Zuckerberg are different entities.

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lo_fye
Is he still the majority shareholder? Does this make him accountable to the
board, now? Maybe he did it both for the $, and as a show of goodwill toward
the board, after that whole "Kiss my butt, we're buying Instagram" thing.

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JustNick
Right decision, FB shares low for today was 31$ now 32. One news from him that
he bought this shares at 31, and market will go up. Than sell again at 45 :)

He wants to become a stock trader :D

~~~
fredoliveira
He didn't buy at $31. He _sold_ 30.2M shares.

~~~
sirclueless
I think you misunderstood. Fred is suggesting that Mark is smart for cashing
out at $37 because the price is now $31. He also thinks that if Mark buys
stock at $31 that will be a strong enough signal to send the price to $45.
That seems a bit of a stretch to me but it's just a hypothetical situation,
not a statement of fact.

~~~
JustNick
Thanks for understanding :)

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tferris
This is really strange.

Such a move should be prepared carefully and when executed then immediately
explained with a press release.

Mark doesn't believe in FB.

~~~
astrodust
This is really common. One reason you IPO is to monetize your investment in
the company.

Bill Gates and Paul Allen have been selling off chunks of shares for decades
and it's not like they don't believe in Microsoft.

~~~
brooksbp
This could be a good thing. Liquidating wealth means opportunity for charity
or other investments.

~~~
astrodust
The dude just got married. Maybe he wants to buy a nice house.

~~~
zdw
1B would buy you one heck of a nice house.

I'd be thinking "island".

