Facebook faces a requirement to raise as much as $5bn through an extra share sale late this year to cover a tax bill for its employees, or as much again as the minimum amount it has already said it plans to raise initial public offering in May.
The second big share sale is a byproduct of the huge profits that the company’s early executives, along with many of its 3,000 rank-and-file employees, stand to make after the social networking company goes public.
Their holdings of restricted stock and options have a combined value of more than $23bn, according to the documents Facebook has filed with US regulators.
That is more than the entire stock market value of rival Yahoo, and represents one of the biggest windfalls since the dotcom boom of the late-1990s first made the stock options of Silicon Valley employees the subject of global envy.
The huge employee stock profits do not include the $5.4bn profits from stock options that are expected to be made this year by Facebook’s co-founder Mark Zuckerberg, part of a personal stake now valued at some $24bn.
The figures are based on the current $45 price that shares are currently indicated to be changing hands for in the private secondary markets, according to SharesPost, though the actual scale of employee profits and tax payments will depend on what happens after Facebook goes public.
Around half of the stock benefits that Facebook has handed to its employees since 2005 are set to vest six months after it goes public, meaning that workers will be able to sell the shares – though the event will also trigger an immediate tax bill.
According to a filing with the Securities and Exchange Commission, Facebook itself will cover that bill, withholding the equivalent of 45 per cent of the value of the restricted stock to be paid to tax authorities.
It plans to sell shares to meet that bill.
The large personal tax payment comes on top of a $1.5-$2bn tax bill that Mr Zuckerberg faces on his own stock option profits this year, and could see a very big slice of Facebook’s total 2012 share sales end up in the pockets of the tax authorities.
California politicians have also started to earmark the expected Facebook tax receipts, with Democrats arguing that the money should be used to keep open state schools that are threatened by the state’s budget crisis.