Vested Facebook Employees Feel Stuck In Limbo

Facebook Employees

Photo: Facebook

Basically, vested Facebook employees have it very good.They joined a startup that was worth less than $10 billion and is now set to IPO at a $100 billion market cap.

But even the most fortunate have headaches some times.

We understand that a number of Facebook employees who would like to quit the company, cash in their shares, and start new companies are stuck in limbo right now.

Here’s why: After a vested Facebook employee quits, he or she has to pay a big capital gains tax in order to exercise their options.

Normally, that’s not a big deal. The taxes are easily covered by money an ex-Facebooker can get selling some their shares on the secondary market.

But things are different now, because internally, Facebook employees expect the company to file an S-1 with SEC any month now.

(Seriously: there was a rumour amongst the rank-and-file that it would come in August. Now the thought is October.)

The reason that matters is that after Facebook files an S-1, the company will have to go into “quiet period.”

Some employees take this to mean they won’t able to sell their stock until the IPO – not expected until April 2012.

If they’re right in this reading of the “quiet period,” anybody who quits Facebook right before the S-1 gets filed will have to eat the tax bill without having the proceeds to pay for it. Painful!

A tragedy? No. But a pain in the neck for employees who’ve spent four years at Facebook and now basically have to wait another year before they can go do something new? Sure.

Related: Android Or iPhone? Here’s What The Big Names In Tech Use

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