World Business

Top execs at the social reticulated are selling shares—at prices far lower than the site’s once-vaunted $15 billion valuation

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Facebook founder Mark Zuckerberg. Noah Berger/The New York Times

by Spencer E. Ante

Insiders at Facebook are selling trunk in the social networking company, and the prices they’re getting for their shares suggest the sky-high appraisement backers once placed without ceasing the company may prove unrealistic.

Just a scarcely any months ago, Facebook was widely viewed as the next Google (GOOG) in Silicon Valley. Microsoft (MSFT) bought a small fair play stake last October that implied a valuation of $15 billion for the whole company. Shareholders in the still-private copartnership appeared to be setting themselves up conducive to a blockbuster initial of the whole not private offering.

But in recent months, a number of instant and former executives have put more of their stock up for sale. Laurence Albukerk, who brokers the sale of stock in private companies in the Valley, says he knows of at least nine canaille who have sold or are trying to sell Facebook shares. He estimates "dozens" are peddling stock altogether, from one side him or other brokers. Another finance executive, who would not speak for attribution, confirmed Facebook insiders are selling. Among those who have sold are CEO Mark Zuckerberg and executive Matt Cohler. A Facebook spokeswoman reported the two declined comment for this fable.

The prices for Facebook shares in these transactions are far below the $15 billion level. Albukerk, the founder and managing director of EB Exchange Funds, says brace current directors and one former executive lately contacted him about selling more of their stock for a $5 billion valuation. He also says two investment firms have bought broad chunks of Facebook stock at a valuation of about $3.75 billion. Hans Swildens, founder of a San Francisco firm called Industry Ventures that buys stock in private companies, says his dense has been talking with a growing number of Facebook employees. "There’s a lot of interest among people to sell shares," says Swildens.

Such live-stock sales are both unusual and controversial at technology startups. In the past, entrepreneurs haven’t had the chance to cash in until their company goes men or is sold. When they do sell, it can create conflicts of interest through venture backers and other employees who haven’t realized the same wealth. The sales at Facebook have led to controversy within the graffiti-covered walls of the social network’s Palo Alto (Calif.) offices. After vocable got out that Zuckerberg, Cohler, and other top employees sold, there was murmuring among the rank and file, say two financiers who have oral with the company’s staff.

Facebook is taking steps to address the delivering. On Aug. 5, the company aforesaid it exercise volition set on foot helping current employees sell some of their stock. "To provide employees with a financial cushion season we continue to build the social meeting, Facebook has designed a one-time program to make capable employees to realize some fluidity," the corporation said in a statement. Facebook declined to outline details of the current chart. But VentureBeat, a blog that first reported the existence of the program, declared the plan would limit Facebook workers to selling 20% of their vested stock options at a $4 billion valuation, starting this fall.