Stock Option Counsel, P.C. - Legal Services for Individuals. Attorney Mary Russell counsels individuals on equity grants, executive compensation design, employment agreements and acquisition terms. She also counsel founders on their personal interests at incorporation, financings and exit events. Please see this FAQ about her services or contact her at (650) 326-3412 or by email..
Who is Mark Zuckerberg’s daddy? In a traditional public company, the CEO’s daddy is the board of directors who hire him, and the board’s daddy is the stockholder who can vote out the board. But Mr. Zuckerberg has voting control over the board and the power to define his own priorities.
So, who IS Mr. Zuckerberg’s daddy? He answered that question in yesterday’s interview with TechCrunch founder Mike Arrington with a subtle message to employees: The employee equity we grant you today, at today’s low prices/strike price with a four-year vesting schedule, will “pop” at the end of the vesting schedule.
Well, he didn’t say that exactly. But he led with that very clear (and obviously carefully crafted) message to employees by defining a remarkably specific timeline for stock price increase (remember, he always references vague future goals such as “build value over the long term” and “making the world more open and connected”):
“Over the next three to five years, I think the biggest question that is on everyone’s minds that will determine at least our performance over that period, is really going to be how well we do with mobile. … I think it’s easy for a lot of folks, without us being out there talking about the stuff we’re doing, to really underestimate how fundamentally good mobile is for us.”
Did someone ask him about the next three to five years? Not the interviewer. Not the public markets. Who cares about three to five years? Employees care about three to five years because they will receive grants of options or RSUs that will become fully vested in three to five years.
So Mr. Zuckerberg’s message to employees is this:
1. I know you care about the Facebook stock price in three to five years, because its delta over that time is your chance to build a fortune in compensation. If you’re not expecting a delta, you’ll place your bets (work) elsewhere.
2. I am thinking about the stock price in three to five years, because that is what you care about. I care about you. I have a plan, and it is going to benefit you directly.
3. The plan is mobile. Facebook is going to have a higher stock price in three to five years because of mobile.
4. Your employee equity is not worthless. It is going to gain value in the exact time frame in which you want it to gain value. And you will be rich.
So, Mr. Zuckerberg has declared what employees are betting on if they bet their workdays on Facebook employee equity. Will the best and brightest take the bet?
Stock Option Counsel, P.C. - Legal Services for Individuals. Attorney Mary Russell counsels individuals on equity grants, executive compensation design, employment agreements and acquisition terms. She also counsel founders on their personal interests at incorporation, financings and exit events. Please see this FAQ about her services or contact her at (650) 326-3412 or by email.