Nick Tippmann
Business Insider is reporting to have the email in which Mark sent to his Lawyers to try and cut Eduardo Saverin out of Facebook. This move, which later cost Mark 4-5% of the company and will bank Saverin around $5 Billion once the company goes public this Friday. In a move in which Wall Street wants to paint Mark as someone who can’t run a major company will show just how ruthless he can be at times.
Mark to his Lawyers:
- This email should probably be attorney-client privileged, not quite how to do that though. Anyhow, Sean and I have agreed that a price of one-half cent per share is the way to go for now. We think we can maybe almost justify and if not, we’ll just deal with it later.
- We also agreed that if the company bonusing us the amount we need for the shares, plus tax, is a good solution to the problem of us all being completely broke. As far as Eduardo goes, I think it’s safe to ask for his permission to make grants. Especially if we do it in conjunction with raising money. It’s probably even OK to say how many shares we’re adding to the pool. It’s probably less OK to tell him who’s getting the shares, just because he might have adverse reaction initially. But I think we may even be able to make him understand that.
- Is there a way to do this without making it painfully apparent to him that he’s being diluted to 10%?
- OK, that’s all for now. I’ll send you the list of grants I need made in another email in a second. Sean can send you grants for his people when he stops coughing up his lungs.
- Hope you guys both feel better,
- Mark
His Lawyers Response:
…I spent some time discussing the risks associated with making these grants and picking the per share price of common stock. Mark, you and I should discuss these at length to insure that you understand them. I’ve outlined them below for your easy reference.
The broad categories of legal risk are a) fiduciary duty. As Eduardo is the only shareholder being diluted by the grants issuances there is substantial risk that he may claim the issuances, especially the ones to Dustin and Mark, but also to Sean, are a breach of fiduciary duty later on if not now. I believe that you previously disclosed these future dilutative issuances to Eduardo before the LLC merger. This is what I recommended at the time. Nevertheless, it would be great if there is some way you could obtain a shareholder consent from Eduardo approving these new issuances. It isn’t *required* but it would be very advantageous and would go a very long way towards preventing any future claims he might have for breach of fiduciary duty. I mentioned this to Sean and he was going to give it some thought.
After all said and done, the Lawyer(s) were right, as the impending lawsuit saw Eduardo walk away with a percentage of the company and never having to work there again.
Source: Business Insider
