Facebook has decided it will not allow employees to sell shares in the privately held company after all. At least not now.
“After carefully considering the current environment, we’ve decided to establish an open-ended timetable for an employee stock sale program,” company officials told the Wall Street Journal.
Facebook CEO Mark Zuckerberg had announced the unusual plan in August. It would have permitted employees to sell $900,000 worth of their vested shares at a $4 billion valuation according to the Journal.
The program had been trumpeted as a revolutionary way for a company to reward employees without sacrificing its exit strategy.
But Facebook encountered unexpected trouble lining up investors to fund the plan at the $4 billion valuation.
In 2007, Microsoft acquired 1.6% of Facebook for $240 million, thus valuing the company at $15 billion but that deal was for preferred stock and included an ad sharing arrangement. Now many are questioning Facebook’s revenue model and the Great Economic Crisis of 2008 hasn’t helped, either.
Which left it up to Zook to submit this Debbie-downer of an email, “I’m writing this note to let you know some bad news. Despite a lot of work, we have not been able to finalize a plan for the employee stock sale we announced in August.”
That had to hurt, since the company has stated recently that it does not plan an IPO anytime soon. Of course, Facebook’s 800 employees are still drawing paychecks, and these days that’s not half bad.