Senior Facebook managers, including chief operating officer Sheryl Sandberg, sold millions of dollars of stock at the end of another lock-up period, continuing a tradition that has drawn widespread criticism from investors and a promise from the CEO not to sell any shares for at least a year.
Sandberg sold $7.4 mn of her Facebook stock, the company’s general counsel Theodore Ullyot sold more than $3.1 mn and chief accounting officer David Spillane sold $5.4 mn, according to filings with the SEC. All the senior managers kept far more shares than they sold.
As of last week, more than 200 mn Facebook shares became eligible for sale. They had been subject to a lock-up period that prevented certain senior executives from selling their shares within a set timeframe after the $16 bn IPO in May. Another lock-up period expires on November 14, and will free up almost 800 mn shares for sale. A third lock-up period expiration on December 14 will free up more than 150 mn shares. The final lock-up period ends on May 18 next year.
The sales made by Sandberg and other senior managers between Wednesday and Friday last week after US markets reopened following the storm-forced closure helped spur a stock price drop of as much as 4 percent. Facebook stock ended the week at $21.18, down sharply from the $38-a-share IPO price.
The expiry of previous lock-up periods also prompted drops in the Facebook share price and drew criticism from investors and analysts, adding to a list of governance-related complaints and mishaps during the IPO. In August, GMI Ratings placed Facebook on watch for a potential downgrade from its current ‘D’ rating to a possible ‘F’ after news that Facebook director Peter Thiel sold another $400 mn worth of shares, bringing his stock sales to more than $1 bn since the IPO.
Facebook founder and chief executive Mark Zuckerberg also sold more than $1 bn worth of shares just after the IPO and James Breyer, chairman of the compensation committee, sold more than $2.1 bn at the IPO.
Amid growing criticism, however, Zuckerberg pledged in August to wait before selling any more of his shares. In a filing to the SEC, Facebook said Zuckerberg ‘has no intention to conduct any sale transactions in our securities for at least 12 months.’
