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?
Yoffie added that he thought Breyer’s sale of Facebook Inc. (NASDAQ:FB) stock as “reasonable” but “surprising.”
However, Yoffie added in regards to the overall lack of sales by executives that “the fact that they’re largely retaining most of their original holdings in the company is the most important signal.”
As of 1:20 p.m. ET Friday, Facebook stock was up slightly on the day to $31.35 per share.
What do you think? Is this a big deal, or much ado about nothing? Give us your opinions on Breyer’s sales and on Facebook Inc. (NASDAQ:FB) in general as its four-month rally continues. Does this rally have legs, do you think?
DISCLOSURE: I own no positions in any stock mentioned.
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