Facebook Inc. (NASDAQ:FB) has been rising since it bottomed out at $18 a share in the fall, recovering my nearly 60 percent since – even with a couple of lockup expirations in the last several months, which were supposedly flooding the market with newly tradable shares. However, one report focuses on the methodical selling of shares by a single member of the company’s board of directors, Jim Breyer.
Over the course of the last eight months – since the IPO in mid-May – Breyer sold about $205 million in shares. And this single individual, who sold his shares over a longer period of time – instead of within a month or a few weeks – is drawing some attention from several outsiders. The thrust of the discussion in the article published by Financial Times revolved around whether it’s a conflict of interest or ethical to be a member of the board of directors of a company and sell shares.
“Board members should never sell,” said Charles Elson, corporate-governance professor at the University of Delaware. “It’s like being a Congressman going for election, then renouncing his citizenship but wishing to remain in Congress.”
On the whole, since the IPO, senior Facebook Inc. (NASDAQ:FB) executives have sold 43 million shares for a total value of $1.5 billion, which actually represents about 4 percent of the total outstanding shares. Breyer’s sales were the largest amount by a senior executive that was for personal gain and had gone virtually ignored – until now. He has sold 6.8 million of his 11.7-million-share allotment at the time of the IPO.
“Everyone understands that having all your eggs in one basket is not a prudent financial strategy,” said David Yoffie, professor at the Harvard Business School. “But you have to balance that against perceptions that you’re abandoning your faith in the company by selling a significant shareholding.”
But is Breyer’s sale of Facebook Inc. (NASDAQ:FB) stock abnormal?