Mark Zuckerberg cannot create `Facebook rival`

Last Updated: Thursday, February 9, 2012 - 18:43

Washington: Facebook founder and CEO Mark
Zuckerberg, along with his three top leutinants, will get
about USD 2 million in just salaries and bonuses, but cannot
work on creating a rival to the social networking giant.

This has been disclosed in Facebook`s amended
registration document for its upcoming IPO, filed with the US
market regulator Securities and Exchange Commission (SEC) last
night.

As per Zuckerberg`s employment agreement with Facebook,
his job can be terminated "at any time for any reason or no
reason", either by him or by the company.

Besides, the company`s employment agreement does not
allow Zuckerberg to "assist any person or entity in competing
with the Company, in preparing to compete with the Company or
in hiring any employees or consultants of the Company."

Similar clauses apply to Chief Operating Officer (COO)
Sheryl Sandberg, Chief Financial Officer (CFO) David Ebersman
and Vice President (Engineering) Mike Schroepfer, for the
period these people are rendering their services to Facebook.

The agreements are silent on whether these people,
including Zuckerberg, can help create a rival of Facebook
after leaving the company.

In addition to in-cash salary and bonus, the pay package
of the top four Facebook executives includes millions of
dollars in form of stock options, performance pay and other
payments.

Besides, the value of shares owned by Zuckerberg and many
others at the company could also make them billionaires after
the listing of Facebook, which is currently in the process of
its USD five billion IPO (Initial Public Offer).

The company said that Zuckerberg, as President and CEO,
would get USD 500,000 of base salary and up to 45 per cent of
this amount as bonus every year. While the basic wage would be
paid in two equal payments a month, he can "over-achieve" the
bonus target pursuant to the company`s bonus plan.

Sandberg and Ebersman would get an annual base salary of
USD 300,000 each, while the same for Schroepfer would be USD
275,000. All the three executives would be entitled for a
bonus payment of up to 45 per cent of their base earnings.

The collective base salary and bonus of the four
executives stand at USD 1.99 million (about Rs 10 crore).

In addition to generally common no-conflict obligations,
Zuckerberg cannot bring with him to Facebook, or disclose to
any person associated with the company, any confidential or
proprietary information belonging to any former employer or
any other third party.

Noting that his job at Facebook was not any specific
period time, the agreement says that the employment would be
on an "at will" basis, meaning that either Zuckerberg or
Facebook can terminate the employment at any time for any
reason or no reason.

While the job duties, title, compensation and benefits,
as well as the company`s personnel policies and procedures,
might change from time to time, the `at will` nature of
Zuckerberg`s employment can be changed only after a written
agreement approved by the Facebook board.

The employment agreement of Sheryl Sandberg also carries
an `at-will` clause.

Facebook has said that Sandberg`s role can be adjusted
from time to time, as the company was a rapidly growing and
changing organisation.

However, her "duties and responsibilities always will be
at least commensurate with those duties and responsibilities
normally associated with and appropriate for someone in the
position of COO."
Beyond her role at Facebook, she has been allowed to
deliver lectures, fulfill speaking engagements and teach at
educational institutions, as long as such activities do not
materially interfere or conflict with her role at the company.

While Sandberg`s business expenses would be reimbursed by
Facebook, a similar clause is not there in the employment
agreement of Zuckerberg.

Upon her termination from Facebook, Sandberg cannot poach
on any of the company`s employees or consultants for a period
of 24 months.

As per the agreement, she cannot "either directly or
indirectly solicit, induce, recruit or encourage any of the
company`s employees or consultants to terminate their
relationship with the Company, or attempt to solicit, induce,
recruit, encourage or take away employees or consultants of
the company, either for myself or for any other person or
entity."

Besides, she cannot use any confidential information to
negatively influence any of Facebook`s clients or customers,
or to work in favour of any rival business.

PTI



First Published: Thursday, February 9, 2012 - 18:03

More from zeenews

 
comments powered by Disqus