SAN FRANCISCO: Facebook (FB) CEO, Mark Zuckerberg reaped a gain of nearly USD 2.3 billion last year when he exercised 60 million stock options just before the online social networking leader’s initial public offering. The windfall detailed in regulatory documents filed Friday saddled Zuckerberg, 28, with a massive tax bill. He raised the money to pay it by selling 30.2 million Facebook Inc shares for USD 38 apiece, or USD 1.1 billion, in the IPO.
FB’s stock has not closed above USD 38 since the IPO was completed last May. The shares gained 71 cents Friday to close at USD 26.85. The 29 per cent decline from FB’s IPO price has cost Zuckerberg nearly USD seven billion on paper, based on the 609.5 million shares of
company stock that he owned as of March 31, according to the regulatory filing. His current stake is still worth USD 16.4 billion. Zuckerberg, who started FB in his Harvard University dorm room in 2004, has indicated he has no immediate plans to sell more stock. The exercise of Zuckerberg’s stock options and his subsequent sale of shares in the IPO had been previously disclosed.
The proxy statement filed to announce FB’s June 11 shareholder meeting is the first time that the magnitude of Zuckerberg’s stock option gain had been quantified. The proxy also revealed that Zuckerberg’s pay package last year rose 16 per cent because of increased personal usage of jets chartered by the company as part of his security programme. Zuckerberg’s compensation last year totalled nearly USD two million, up from USD 1.7 million last year. Of those amounts, USD 1.2 million covered the costs of Zuckerberg’s personal air travel last year, up from USD 692,679
If not for the spike in travel costs, Zuckerberg’s pay would have declined by 17 per cent. His salary and bonus totalled USD 769,306 last year versus USD 928,833 in 2011. Zuckerberg will take a big pay cut this year. His annual salary has been reduced to USD one and he will no longer
receive a bonus, according to FB’s filing. That puts Zuckerberg’s current cash compensation on the same level as Google CEO and Co-founder, Larry Page, whose stake in his company is worth about USD 20 billion.
The Associated Press formula for determining an executive’s total compensation calculates salary, bonuses, perquisites, above-market interest that the company pays on deferred
compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits or stock option gains such as those recognised by Zuckerberg did last year.