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FACEBOOK INC
FORM 10-K
(Annual Report)
Filed 01/29/15 for the Period Ending 12/31/14
Address 1601 WILLOW ROAD
MENLO PARK, CA 94025
Telephone 650-618-7714
CIK 0001326801
Symbol FB
SIC Code 7370 - Computer Programming, Data Processing, And
Industry Computer Services
Sector Technology
Fiscal Year 12/31
http://www.edgar-online.com
© Copyright 2015, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    FACEBOOK INC FORM 10-K (Annual Report) Filed 01/29/15 for the Period Ending 12/31/14 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 1601 WILLOW ROAD MENLO PARK, CA 94025 650-618-7714 0001326801 FB 7370 - Computer Programming, Data Processing, And Computer Services Technology 12/...

  • Page 2
    ..., Menlo Park, California 94025 (Address of principal executive offices and Zip Code) (650) 543-4800 (Registrant's telephone number, including area code) _____ Securities registered pursuant to Section 12(b) of the Act: Class A Common Stock, $0.000006 par value (Title of each class) The NASDAQ...

  • Page 3

  • Page 4
    FACEBOOK, INC. FORM 10-K TABLE OF CONTENTS Note About Forward-Looking Statements Limitations of Key Metrics and Other Data PART I Item 1. Item 1A. Item 1B. Item 2. Item 3. Item 4. 3 4 Business Risk Factors Unresolved Staff Comments Properties Legal Proceedings Mine Safety Disclosures 5 9 27 27 27 ...

  • Page 5
    2

  • Page 6
    ...term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in Part I, Item 1A, "Risk Factors" in this Annual Report on Form 10-K. Moreover, we operate in a very competitive...

  • Page 7
    ... mobile-only DAUs and mobile-only MAUs discussed in this Annual Report on Form 10-K, as well as ARPU, do not include users of Instagram or WhatsApp unless they would otherwise qualify as such users, respectively, based on their other activities on Facebook. In addition, other user engagement metrics...

  • Page 8
    ... In addition to ads on Facebook, marketers can buy ads on Instagram and on other websites and applications such as Audience Network, Atlas, and LiveRail. How We Create Value for Developers Facebook supports developers' efforts to build, grow, and monetize their mobile and web applications. First, we...

  • Page 9
    ... focus on Facebook advertising. We currently operate more than 30 sales offices around the globe. We have operations teams to provide support for people, marketers and developers in five regional centers located in Menlo Park, California; Austin, Texas; Dublin, Ireland; Hyderabad, India; and...

  • Page 10
    ... offering in May 2012 and our Class A common stock is listed on The NASDAQ Global Select Market under the symbol "FB." Our principal executive offices are located at 1601 Willow Road, Menlo Park, California 94025, and our telephone number is (650) 543-4800. Facebook, the Facebook logo, FB, the Like...

  • Page 11
    ... to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K. Available Information Our website address is www.facebook.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form...

  • Page 12
    ... of content shared on our products and services; we are unable to continue to develop products for mobile devices that users find engaging, that work with a variety of mobile operating systems and networks, and that achieve a high level of market acceptance; there are decreases in user sentiment...

  • Page 13
    ... to build, grow, and monetize mobile and web applications, reduce user activity on Facebook by making it easier for our users to interact and share on third-party mobile and web applications. If we are unable to maintain or increase our user base and user engagement, our revenue and financial...

  • Page 14
    ...-sharing, and micro-blogging, and companies that provide web- and mobile-based information and entertainment products and services that are designed to engage users and capture time spent online and on mobile devices. In addition, we face competition from traditional, online, and mobile businesses...

  • Page 15
    ... fees or other charges related to our delivery of ads; or by making access to our products more difficult. As a result, our competitors may acquire and engage users or generate advertising or other revenue at the expense of our own efforts, which may negatively affect our business and financial...

  • Page 16
    ... develop and market Oculus' products or technology. In addition, in October 2014, we acquired WhatsApp Inc. (WhatsApp), a cross-platform mobile messaging company. We currently monetize WhatsApp in only a very limited fashion, and we may not be successful in our efforts to generate meaningful revenue...

  • Page 17
    ...or cause users to lose confidence in our products. Our efforts to protect our company data or the information we receive may also be unsuccessful due to software bugs or other technical malfunctions, employee error or malfeasance, government surveillance, or other factors. In addition, third parties...

  • Page 18
    ...technologies, or intellectual property, including potentially significant amortization costs and impairment loss and additional investments to further develop the acquired technologies; our ability to obtain equipment and components for our data centers and other technical infrastructure in a timely...

  • Page 19
    ...our business is costly and we expect our expenses to continue to increase in the future as we broaden our user base, as users increase the number of connections and amount of data they share with us, as we develop and implement new products, and as we continue to hire additional employees to support...

  • Page 20
    ... software source code under open source licenses and have made other technology we developed available under other open licenses, and we include open source software in our products. For example, we have contributed certain specifications and designs related to our data center equipment to the Open...

  • Page 21
    ... to our products. We have faced, currently face, and will continue to face claims relating to information that is published or made available on our products. In particular, the nature of our business exposes us to claims related to defamation, intellectual property rights, rights of publicity and...

  • Page 22
    ... companies we have acquired. In particular, Oculus builds technology and products that are new to Facebook, and accordingly we did not have significant experience or structure in place to support this business prior to the acquisition. We plan to make substantial investments of resources to support...

  • Page 23
    ... location. For example, a mobile-only user may appear to be accessing Facebook from the location of the proxy server that the user connects to rather than from the user's actual location. The methodologies used to measure user metrics may also be susceptible to algorithm or other technical errors...

  • Page 24
    ... to make investments to enable developers to build, grow, and monetize mobile and web applications that integrate with Facebook. Such existing and prospective developers may not be successful in building, growing, or monetizing mobile and/or web applications that create and maintain user engagement...

  • Page 25
    ...Payments on Facebook, including increased costs and diversion of management time and effort and other resources to deal with bad transactions or customer disputes; potential fraudulent or otherwise illegal activity by users, developers, employees, or third parties; restrictions on the investment of...

  • Page 26
    ... types of arrangements to finance some of our equipment, offices, and data centers. In addition, we have a $6.5 billion revolving credit facility that we may draw upon to finance our operations or other corporate purposes. If we default on these leasing and credit obligations, our leasing partners...

  • Page 27
    ... is likely to continue to be, volatile. Since shares of our Class A common stock were sold in our IPO in May 2012 at a price of $38.00 per share, our stock price has ranged from $17.55 to $82.17 through December 31, 2014. In addition to the factors discussed in this Annual Report on Form 10-K, the...

  • Page 28
    ...to some investors or otherwise harm our stock price. Because we qualify as a "controlled company" under the corporate governance rules for NASDAQ-listed companies, we are not required to have a majority of our board of directors be independent, nor are we required to have a compensation committee or...

  • Page 29
    ... voting power of our common stock, our board of directors will be classified into three classes of directors with staggered three-year terms and directors will only be able to be removed from office for cause; when the outstanding shares of our Class B common stock represent less than a majority of...

  • Page 30
    .... We also own a data center facility in Lulea, Sweden. We believe that our facilities are adequate for our current needs. To support planned future growth, we are currently making significant investments to expand our corporate headquarters in Menlo Park, California. Item 3. Legal Proceedings...

  • Page 31
    ...FB" since May 18, 2012. Prior to that time, there was no public market for our stock. The following table sets forth for the indicated periods the high and low intra-day sales prices per share for our Class A common stock on the NASDAQ Global Select Market. 2014 High Low High 2013 Low First Quarter...

  • Page 32
    ... 31, 2014 of the cumulative total return for our Class A common stock, the Standard & Poor's 500 Stock Index (S&P 500 Index) and the Nasdaq Composite Index (NASDAQ Composite). The graph assumes that $100 was invested at the market close on May 18, 2012 in the Class A common stock of Facebook, Inc...

  • Page 33
    ...share attributable to Class A and Class B common stockholders. As of December 31, 2014 2013 2012 (in millions) 2011 2010 Consolidated Balance Sheets Data: Cash, cash equivalents, and marketable securities Working capital Property and equipment, net Total assets Capital lease obligations Long-term...

  • Page 34
    ... to help investors better understand underlying trends in our business. We use FCF in discussions with our senior management and board of directors. FCF has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of other GAAP financial measures...

  • Page 35
    ... "Limitations of Key Metrics and Other Data" in this Annual Report on Form 10-K. Overview We generate substantially all of our revenue from advertising and from fees associated with our Payments infrastructure that enables people who use Facebook to purchase virtual and digital goods from developers...

  • Page 36
    ...activities on Facebook. In addition, other user engagement metrics do not include Instagram or WhatsApp unless otherwise specifically stated. Trends in the number of users affect our revenue and financial results by influencing the number of ads we are able to show, the value of our ads to marketers...

  • Page 37
    ... decreased in December 2014 compared to the same period in 2013. We believe that use of Facebook through personal computers will continue to decline in all regions. • Mobile DAUs . We define a mobile DAU as a user who accessed Facebook via a mobile application or via mobile versions of our website...

  • Page 38
    ... or a mobile device, used our Messenger app, or took an action to share content or activity with his or her Facebook friends or connections via a third-party website or application that is integrated with Facebook, in the last 30 days as of the date of measurement. MAUs are a measure of the size of...

  • Page 39
    ... Facebook through mobile devices in 2014 as compared to the same period in 2013, with users in India, Brazil, and the United States representing key sources of mobile MAU growth in 2014. There were 526 million mobile MAUs who accessed Facebook solely through mobile applications or our mobile website...

  • Page 40
    ... and financial results because we currently monetize users in different geographies at different average rates. Our revenue and ARPU in regions such as United States & Canada and Europe are relatively higher due to the size and maturity of those advertising markets as well as our greater sales...

  • Page 41
    ... can make payments on Facebook by using debit and credit cards, PayPal, mobile phone payments, gift cards, or other methods. We receive a fee from developers when a person engages in a payment transaction for the purchase of a virtual or digital good on the Facebook website. The price of the virtual...

  • Page 42
    ... assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade names from a market participant perspective, useful lives, and discount rates. Management's estimates of fair value...

  • Page 43
    ... addition to the recoverability assessment, we routinely review the remaining estimated useful lives of our finite-lived intangible assets. If we reduce the estimated useful life assumption for any asset, the remaining unamortized balance would be amortized over the revised estimated useful life. 40

  • Page 44
    ... revenue is generated by displaying ad products on Facebook properties, including our mobile applications, and third-party affiliated websites or mobile applications. Marketers pay for ad products either directly or through their relationships with advertising agencies, based on the number...

  • Page 45
    ... table sets forth our consolidated statements of income data (as a percentage of revenue): Year Ended December 31, 2014 2013 2012 Consolidated Statements of Income Data: Revenue Costs and expenses: Cost of revenue Research and development Marketing and sales General and administrative Total...

  • Page 46
    ... in the number of marketers actively advertising on Facebook, which we believe increased demand for our ad inventory, (ii) other product changes to increase the value and performance of our ads, and (iii) an increase in user growth and engagement. In 2014 compared to 2013 , the average price per ad...

  • Page 47
    ...compared to 2012. In 2015, we anticipate that the cost of revenue will increase at a higher rate than it increased in 2014 as we expand our data center capacity and technical infrastructure to support user growth, increased user engagement, and the delivery of new products and services. Additionally...

  • Page 48
    ... decrease in share-based compensation expense compared to 2012. In 2015, we plan to continue hiring software engineers and other technical employees to support our research and development initiatives. Marketing and sales Year Ended December 31, 2014 2013 (dollars in millions) 2012 2014 vs 2013...

  • Page 49
    ... to 2012. The decrease in 2013 was partially offset by increased payroll and benefits expense resulting from a 19% increase in employee headcount and increased amortization of acquired patents. In 2015, we plan to increase general and administrative employee headcount to support overall company...

  • Page 50
    ... Sep 30, 2014 Jun 30, 2014 Mar 31, 2014 Dec 31, 2013 Sep 30, 2013 Jun 30, 2013 Mar 31, 2013 (in millions) Consolidated Statements of Income Data: Revenue: Advertising Payments and other fees Total revenue Costs and expenses: Cost of revenue Research and development Marketing and sales General and...

  • Page 51
    ...2014 Jun 30, 2014 Mar 31, 2014 Dec 31, 2013 Sep 30, 2013 Jun 30, 2013 Mar 31, 2013 (as a percentage of total revenue) Consolidated Statements of Income Data: Revenue: Advertising Payments and other fees Total revenue Costs and expenses: Cost of revenue Research and development Marketing and sales...

  • Page 52
    ...billion for acquisitions of businesses and $2.50 billion for other cash outflows mainly related to purchases of property and equipment. These decreases were partially offset by $5.46 billion of cash generated from operations and $1.87 billion in excess tax benefit from share-based award activity. In...

  • Page 53
    ... for capital expenditures related to the purchase of servers, network infrastructure, and the construction of data centers, as well as $882 million for the net purchase of marketable securities and $368 million for the acquisition of businesses and other assets, such as patents. The decrease in...

  • Page 54
    ... "Legal Proceedings" of this Annual Report on Form 10-K for additional information regarding contingencies. Recently Issued and Adopted Accounting Pronouncement In May 2014, the Financial Accounting Standards Board issued guidance related to revenue from contracts with customers. Under this guidance...

  • Page 55
    ...of deposit, time deposits, money market funds, U.S. government securities, U.S. government agency securities, and corporate debt securities . Our investment policy and strategy are focused on preservation of capital and supporting our liquidity requirements. Changes in U.S. interest rates affect the...

  • Page 56
    Item 8. Financial Statements and Supplementary Data FACEBOOK, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Reports of Independent Registered Public Accounting Firm Consolidated Financial Statements: Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of ...

  • Page 57
    Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders of Facebook, Inc. We have audited the accompanying consolidated balance sheets of Facebook, Inc. as of December 31, 2014 and 2013 , and the related consolidated statements of income, comprehensive income,...

  • Page 58
    ... with the standards of the Public Company Accounting Oversight Board (United States), the 2014 consolidated financial statements of Facebook, Inc. and our report dated January 29, 2015 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP San Francisco, California January 29, 2015 55

  • Page 59
    FACEBOOK, INC. CONSOLIDATED BALANCE SHEETS (In millions, except for number of shares and par value) December 31, 2014 2013 Assets Current assets: Cash and cash equivalents Marketable securities Accounts receivable, net of allowances for doubtful accounts of $39 and $38 as of December 31, 2014 and ...

  • Page 60
    FACEBOOK, INC. CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts) Year Ended December 31, 2014 2013 2012 Revenue Costs and expenses: Cost of revenue Research and development Marketing and sales General and administrative Total costs and expenses Income from operations ...

  • Page 61
    FACEBOOK, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Year Ended December 31, 2014 2013 2012 Net income Other comprehensive income (loss): Change in foreign currency translation adjustment Change in unrealized gain/loss on available-for-sale investments, net of tax Change in...

  • Page 62
    ...stock related to acquisitions Issuance of common stock for settlement of RSUs Shares withheld related to net share settlement Share-based compensation, related to employee share-based awards Tax benefit from share-based award activity Other comprehensive loss Net income Balances at December 31, 2014...

  • Page 63
    ... current assets Other assets Accounts payable Partners payable Accrued expenses and other current liabilities Deferred revenue and deposits Other liabilities Net cash provided by operating activities Cash flows from investing activities Purchases of property and equipment Purchases of marketable...

  • Page 64

  • Page 65
    ...Non-cash investing and financing activities: Net change in accounts payable and accrued expenses and other current liabilities related to property and equipment additions Property and equipment acquired under capital leases Fair value of shares issued related to acquisitions of businesses $ $ $ 14...

  • Page 66
    ..., and third-party affiliated websites or mobile applications. The arrangements are evidenced by either online acceptance of terms and conditions or contracts that stipulate the types of advertising to be delivered, the timing and the pricing. Marketers pay for ad products either directly or through...

  • Page 67
    ...includes credit card and other transaction fees related to processing customer transactions, amortization of intangible assets, and cost of virtual reality platform device inventory sold. Share-based Compensation We account for share-based employee compensation plans under the fair value recognition...

  • Page 68
    ... reflect management's estimate of assumptions that market participants would use in pricing the asset or liability. Our valuation techniques used to measure the fair value of money market funds and marketable debt securities were derived from quoted market prices or alternative pricing sources and...

  • Page 69
    ...Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Management's estimates of fair value are based upon...

  • Page 70
    ... consist of short-term money market funds, which are managed by reputable financial institutions. Marketable securities consist of investments in U.S. government securities, U.S. government agency securities, and corporate debt securities . Our investment policy limits investment instruments to...

  • Page 71
    ...that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. The following table summarizes the components of the preliminary purchase consideration transferred based on the closing price of $77.56 per share of our common stock...

  • Page 72
    ...success of the related product or technology. The following table summarizes the components of the preliminary purchase consideration transferred based on the closing price of our common stock as of the acquisition date (in millions): Cash Common stock Less: post-acquisition share-based compensation...

  • Page 73
    ... of operations related to our acquisitions, other than WhatsApp, during the year ended December 31, 2014 have not been presented because they are not material to our consolidated statements of income, either individually or in the aggregate. The fair value of assets acquired and liabilities assumed...

  • Page 74
    ... same liquidation and dividend rights. The numerators and denominators of the basic and diluted EPS computations for our common stock are calculated as follows (in millions, except per share amounts): Year Ended December 31, 2014 Class A Class B Class A 2013 Class B Class A 2012 Class B Basic EPS...

  • Page 75
    ...): Fair Value Measurement at Reporting Date Using Quoted Prices in Active Markets for Identical Assets (Level 1) Description December 31, 2014 Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents: Money market funds Marketable securities...

  • Page 76
    ... at December 31, 2014 and 2013 , respectively. Construction in progress includes costs primarily related to the expansion of our corporate headquarters in Menlo Park, California, construction of data centers, and network equipment infrastructure to support our data centers around the world. No...

  • Page 77
    ... as of December 31, 2012 Goodwill acquired Balance as of December 31, 2013 Goodwill acquired Effect of currency translation adjustment Balance as of December 31, 2014 Intangible assets consist of the following (in millions): December 31, 2014 Useful lives from date of acquisitions (in years) Gross...

  • Page 78
    ... of accrued expenses and other current liabilities are as follows (in millions): December 31, 2014 2013 Accrued compensation and benefits Accrued property and equipment Other current liabilities Accrued expenses and other current liabilities The components of other liabilities are as follows (in...

  • Page 79
    ... of rulings in 2013 and 2014, the court denied our motion to dismiss the consolidated securities class action and granted our motions to dismiss the derivative actions against our directors and certain of our officers. The plaintiffs in four of these derivative actions have filed notices of appeal...

  • Page 80
    ...such parties. We have not recorded any liability for costs related to indemnification through December 31, 2014 . Note 11. Stockholders' Equity Initial Public Offering In May 2012, we completed our IPO in which we issued and sold 180,000,000 shares of Class A common stock at a public offering price...

  • Page 81
    ... 2005 Officers' Stock Plan as the only outstanding option issued under this plan had been exercised in full. The following table summarizes stock option award activities under the Stock Plans for the year ended December 31, 2014 : Shares Subject to Options Outstanding Weighted Average Exercise Price...

  • Page 82
    ...2012, the majority of RSUs were net share settled. Under net settlement procedures, upon each settlement date, RSUs were withheld to cover the required withholding tax, which is based on the value of the RSU on the settlement date as determined by the closing price of our common stock on the trading...

  • Page 83
    ... federal statutory income tax rate of 35.0% to our effective tax rate is as follows (in percentages): Year Ended December 31, 2014 2013 2012 U.S. federal statutory income tax rate State income taxes, net of federal benefit Research tax credits Share-based compensation Effect of non-U.S. operations...

  • Page 84
    ... (in millions): Year Ended December 31, 2014 2013 2012 Gross unrecognized tax benefits-beginning of period Increases related to prior year tax positions Decreases related to prior year tax positions Increases related to current year tax positions Decreases related to settlements of prior year tax...

  • Page 85
    ... tax benefits. Note 14. Geographical Information Revenue by geography is based on the billing address of the advertiser or developer. The following table sets forth revenue and property and equipment, net by geographic area (in millions): Year Ended December 31, 2014 2013 2012 Revenue: United...

  • Page 86
    ...in management's evaluation pursuant to Rules 13a-15(d) or 15d15(d) of the Exchange Act during the fourth quarter of 2014 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Limitations on Effectiveness of Controls and Procedures and...

  • Page 87
    ... to be filed with the Securities and Exchange Commission (SEC) within 120 days of the fiscal year ended December 31, 2014 . Our board of directors has adopted a Code of Conduct applicable to all officers, directors and employees, which is available on our website (investor.fb.com) under "Corporate...

  • Page 88
    ... 15. Exhibits, Financial Statement Schedules We have filed the following documents as part of this Form 10-K: 1. Consolidated Financial Statements: Page No. 54 56 57 58 59 60 62 Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Income...

  • Page 89
    ... caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Menlo Park, State of California, on this 29th day of January 2015 . FACEBOOK, INC. Date: January 29, 2015 / S / David M. Wehner David M. Wehner Chief Financial Officer...

  • Page 90
    Signature Title Date /s/ Mark Zuckerberg Mark Zuckerberg Chairman and Chief Executive Officer (Principal Executive Officer) Chief Financial Officer (Principal Financial Officer) Chief Accounting Officer (Principal Accounting Officer) Director January 29, 2015 /s/ David M. Wehner David M. ...

  • Page 91
    ... 10.6+ 2012 Equity Incentive Plan forms of award agreements. 2012 Equity Incentive Plan forms of award agreements (Additional Forms). Form of Non-Plan Restricted Stock Unit Award Notice and Award Agreement 2014 Bonus Plan. Amended and Restated Offer Letter, dated January 27, 2012, between Registrant...

  • Page 92
    .... Offer Letter, dated October 6, 2014, between Registrant and Jan Koum. Amended and Restated Offer Letter, dated January 27, 2012, between Registrant and David A. Ebersman. Lease, dated February 7, 2011, between Registrant and Wilson Menlo Park Campus, LLC. Credit Agreement, dated August 15, 2013...

  • Page 93
    89

  • Page 94
    ... PLAN FORM OF NOTICE OF RESTRICTED STOCK UNIT AWARD (US) GRANT NUMBER: _____ Unless otherwise defined herein, the terms defined in the Facebook, Inc. (the " Company ") 2012 Equity Incentive Plan (the " Plan ") shall have the same meanings in this Notice of Restricted Stock Unit Award (the " Notice...

  • Page 95
    ... of RSUs shall be made within 30 days following the applicable date of vesting under the vesting schedule set forth in the Notice. Settlement of RSUs shall be in Shares. 2. No Stockholder Rights. Unless and until such time as Shares are issued in settlement of vested RSUs, Participant shall have no...

  • Page 96
    ...of the Notice, this RSU Agreement, the Plan, account statements, Plan prospectuses required by the Securities and Exchange Commission, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual...

  • Page 97
    ...FORM OF NOTICE OF RESTRICTED STOCK UNIT AWARD GRANT NUMBER: Unless otherwise defined herein, the terms defined in the Facebook, Inc. (the " Company ") 2012 Equity Incentive Plan (the " Plan ") shall have the same meanings in this Notice of Restricted Stock Unit Award (the " Notice "). Name: Address...

  • Page 98
    ...rules as may be established by the Committee and in compliance with the Company's Insider Trading Policy and 10b5-1 Trading Plan Policy, if applicable. The Company may refuse to deliver the Shares if Participant fails to comply with Participant's obligations in connection with the tax withholding as...

  • Page 99
    ...Such data may include, but is not limited to, Participant's name, work authorization, government or tax identification number, date of birth, beneficiaries' contact information, RSU grant history, and compensation information. Participant also hereby gives explicit consent to the Company and related...

  • Page 100
    ... as compensation for, or relating in any way to, past services for the employer, the Company or any Subsidiary or Parent; (g) in the event that Participant is not an Employee of the Company, the RSUs and Participant's participation in the Plan will not be interpreted to form an employment or service...

  • Page 101
    ...of the Notice, this RSU Agreement, the Plan, account statements, Plan prospectuses required by the Securities and Exchange Commission, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual...

  • Page 102
    ... US dollar transactions must be conducted through a financial intermediary authorized by the Argentine Central Bank. US dollar proceeds from the sale of stock by a participant, when remitted to Argentina, are subject to conversion to Argentine pesos at applicable exchange rates, as well as relevant...

  • Page 103
    ... of the current market price of the underlying Shares subject to your RSUs. You can get those details by contacting [email protected] . Issue of RSUs RSUs will be issued for no consideration. Risks of Participation in the Plan Participation in the Plan and acquiring Shares in Facebook, Inc. carries...

  • Page 104
    ... as an agreement by the Company to sell or issue shares to the Employee and, as such, is intended to be subject to the rules in section 7 of the Income Tax Act (Canada). Under those rules, the Employee will be considered to have received an employment benefit at the time of settlement of the vested...

  • Page 105
    ..., Facebook or your employer requests proof of repatriation. Ireland Director Reporting If you are a director or shadow director of the Company or related company, you may be subject to special reporting requirements with regard to the acquisition of shares or rights over shares. Please contact...

  • Page 106
    ... to the terms and conditions of the trust deed signed between the Trustee and the Company and/or the applicable Subsidiary, which is available for the Participant's review, during normal working hours, at Company's offices, (v) acknowledges that releasing the RSUs and Shares from the control of the...

  • Page 107
    ... applicable law, the Company shall use reasonable efforts to receive a securities exemption from the Israeli Securities Authority to avoid the requirement to file an Israeli securities prospectus in relation to the Plan. Copies of the Plan and the Form S-8 registration statement for the Plan filed...

  • Page 108
    ...including but not limited to, access, delete, update, ask for rectification of my Data and stop, for legitimate reason, the Data processing. Furthermore, I am aware that my Data will not be used for direct marketing purposes. Japan Securities Acquisition Report If you acquire Shares valued at more...

  • Page 109
    ... to special reporting requirements with regard to the acquisition of shares or rights over shares. Please contact your personal legal advisor for further details if you are a director or shadow director. Exit Tax / Deemed Exercise Rule If you have received RSUs in relation to your employment in...

  • Page 110
    Spain Foreign Share Ownership Reporting If you are a Spanish resident, your acquisition, purchase, or sale of foreign-listed stock may be subject to ongoing annual reporting obligations with the General Directorate of International Economy and Foreign Transactions. If shares are kept abroad, you ...

  • Page 111
    ...Tax-Related Items will constitute a loan owed by Participant to the Employer, effective on the Due Date. Participant agrees that the loan will bear interest at the then-current Official Rate of Her Majesty's Revenue and Customs (" HMRC "), it will be immediately due and repayable, and the Company or...

  • Page 112
    ANNEX 1 FACEBOOK INC. 2012 EQUITY INCENTIVE PLAN Restricted Stock Unit Awards for Employees in the United Kingdom FORM OF ELECTION TO TRANSFER THE EMPLOYER'S SECONDARY CLASS 1 NATIONAL INSURANCE LIABILITY TO THE EMPLOYEE 1. Parties This Election is between: (A) The named Participant (the "Employee"...

  • Page 113
    ... authorizes the Company and/or the Employer to collect the Employer's Liability from the Employee at any time after the Taxable Event: (i) by deduction from salary or any other payment payable to the Employee at any time on or after the date of the Taxable Event; and/or directly from the Employee by...

  • Page 114
    ...or the Board of Directors. The decisions of the Administrators are final and binding. 3. Eligibility. Participation in the Plan is limited to Full-Time regular and Part-Time regular Facebook employees who are employed by Facebook on or before December 31, 2014. Participation in the Plan is effective...

  • Page 115
    ..., 2015 for the second semi-annual performance period of the year. A participant must be employed by the Company at the time the bonus payment is made in order to receive such payment unless local law or a written agreement between the participant and the Company provides. If the Company is found to...

  • Page 116
    ... employee or the Company or its subsidiaries may terminate the employment relationship at any time and for any reason or no particular reason or cause. 10. Governing Law. The Plan shall be governed by, and interpreted, construed, and enforced in accordance with, the laws of the State of California...

  • Page 117
    ... restates the offer letter entered into between you and Facebook, Inc. (the " Company "), dated October 17, 2005. You will continue to work at the Company's Menlo Park office in the role of Chief Product Officer, reporting to Mark Zuckerberg. 1. Compensation . a. Base Wage . In this position, you...

  • Page 118
    ... between you and the Company on this term. Although your job duties, title, compensation and benefits, as well as the Company's personnel policies and procedures, may change from time to time, the "at will" nature of your employment may only be changed in an express written agreement signed by you...

  • Page 119
    ... letter will be governed by the laws of California, without regard to its conflict of laws provisions. Very truly yours, FACEBOOK, INC. /s/ Colin S. Stretch By: Colin S. Stretch Vice President, General Counsel and Secretary ACCEPTED AND AGREED: Chris Cox /s/ Chris Cox Signature May 2, 2014 Date

  • Page 120
    ... restates the offer letter entered into between you and Facebook, Inc. (the " Company "), dated October 29, 2012. You will continue to work at the Company's Menlo Park office in the role of Chief Financial Officer, reporting to Mark Zuckerberg. 1. Compensation . a. Base Wage . In this position, you...

  • Page 121
    ... between you and the Company on this term. Although your job duties, title, compensation and benefits, as well as the Company's personnel policies and procedures, may change from time to time, the "at will" nature of your employment may only be changed in an express written agreement signed by you...

  • Page 122
    ...governed by the laws of California, without regard to its conflict of laws provisions. Very truly yours, FACEBOOK, INC. /s/ Colin S. Stretch By: Colin S. Stretch Vice President, General Counsel and Secretary ACCEPTED AND AGREED: David M. Wehner /s/ David M. Wehner Signature August 25, 2014 Date

  • Page 123
    ...) Edge Network Services Limited (Ireland) Facebook Ireland Holdings Limited (Ireland) Facebook Ireland Limited (Ireland) Facebook Operations, LLC (Delaware) Oculus VR, LLC (Delaware) Parse, LLC (Delaware) Pinnacle Sweden AB (Sweden) Siculus, LLC (Delaware) Vitesse, LLC (Delaware) WhatsApp Inc...

  • Page 124
    ... Plan, and 2012 Equity Incentive Plan of Facebook, Inc., Registration Statement (Form S-8 No. 333-199172) pertaining to the Non-Plan Restricted Stock Unit Awards of Facebook, Inc.; and Registration Statement (Form S-3 ASR No. 333-199678) of Facebook, Inc. San Francisco, California January 29, 2015

  • Page 125
    ...'s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: January 29, 2015 /s/ MARK ZUCKERBERG...

  • Page 126
    ...'s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: January 29, 2015 /s/ DAVID M. WEHNER...

  • Page 127
    ...Executive Officer of Facebook, Inc. (Company), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: • the Annual Report on Form 10-K of the Company for the year ended December 31, 2014 (Report...

  • Page 128
    ...Financial Officer of Facebook, Inc. (Company), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: • the Annual Report on Form 10-K of the Company for the year ended December 31, 2014 (Report...