Following tables show information on Facebook Ine's executive compensation and stock price. As shown in the Tables, the CEO of Facebook Inc received a salary, bonus, and stock options in 2012. Company name Facebook Inc Date Share price Fiscal Year 2012 May 2012 $29.60 CEO Mark Zuckerberg Jun. 2012 $31.10 Salary $ Jul. 2012 $21.71 Bonus S Aug, 2012 $18.06 Options awarded in November 8, 2005 shares Sep. 2012 $21.66 Total options owned in 2012 shares Oct. 2012 $21.11 Total stocks owned in 2012(exclude options) shares Nov. 2012 $28.00 Exercise Price (K) $ Dec. 2012 $26.62 Total shares outstanding 1.747.430,590 (A) 668,367,113 (B) Stock return volatility (0) 0.6423 Dividend yield (d) Risk-free rate: 1M T-bill at 12/2012 (1) 0.07 Maturity (T) Years to Maturity (T-t) years How much will Mr. Mark Zuckerberg's wealth (from the above compensation, which includes stock and option grants) increase for $1 increase in Facebook Inc's stock price (as of December 2012) (1) Find z (note: log.(26.62/0.06) = LN(26.62/0.06) = 6.0951) Roge()+(r-d+2)x(T-1) OXT- .. ZE Option delta (2) Find delta for 1 share of option Option Delta = (z) x e-dx(-1) = (3) Find increase on CEO's wealth for $1 increase in Facebook stock price (note: stock delta=1) $ Wealth increase = (Number of options)*(option delta)+(Number of stocks)*(stock delta) Normal Distribution Probability Density Function: $(2) = 2.1 xu where = = (u is the mean, c is the standard deviation) 1 Cumulative Distribution Function: 0(2)=L. VIR e dx Z z -4 -3.9 -3.8 -3.7 -3.6 -3.5 -3.4 -3.3 -3.2 -3.1 -3 -2.9 -2.8 -2.7 -2.6 -2.5 -2.4 -2.3 -2.2 -2.1 -2 -1.9 -1.8 -1.7 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1 1.2 1. (2) 0.000134 0.000199 0.000292 0.000425 0.000612 0.000873 0.001232 0.001723 0.002384 0.003267 0.004432 0.005953 0.007916 0.010421 0.013583 0.017528 0.022395 0.028327 0.035475 0.043984 0.053991 0.065616 0.07895 0.094049 0.11092 0.12952 0.14973 0.17137 0.19419 0.21785 0.24197 0.26609 0.28969 0.31225 0.33322 0.35207 0.36827 0.38139 0.39104 0.39695 0.39894 D(2) 0.0000317 0.0000481 0.0000723 0,000108 0.000159 0.000233 0.000337 0.000483 0.000687 0.000968 0.00135 0.001866 0.002555 0,00346 0.004661 0.00621 0.008198 0.010724 0.013903 0.017864 0.02275 0.028717 0,03593 0.044565 0.054799 0.066807 0.080757 0.0968 0.11507 0.13567 0.15866 0.18406 0.21186 0.24196 0.27425 0.30854 0.34458 0.38209 0,42074 0.46017 0.5 1.5 1.6 1.7 1.8 1.9 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 3 3.1 (2) 0.39894 0.39695 0.39104 0.38139 0.36827 0.35207 0.33322 0.31225 0.28969 0.26609 0.24197 0.21785 0.19419 0.17137 0.14973 0.12952 0.11092 0.094049 0.07895 0.065616 0.053991 0.043984 0.035475 0.028327 0.022395 0.017528 0.013583 0.010421 0.007916 0.005953 0.004432 0.003267 0.002384 0.001723 0.001232 0.000873 0.000612 0.000425 0.000292 0.000199 0.000134 0(2) 0.5 0.53983 0.57926 0,61791 0.65542 0.69146 0.72575 0.75804 0.78814 0.81594 0.84134 0.86433 0.88493 0.9032 0.91924 0.93319 0.9452 0.95543 0.96407 0.97128 0.97725 0.98214 0.9861 0.98928 0.9918 0.99379 0.99534 0.99653 0.99744 0.99813 0.99865 0.99903 0.99931 0.99952 0.99966 0.99977 0.99984 0.99989 0.99993 0.99995 0.99997 -1.5 -1.4 -1.3 - 1.2 3.2 -1 -0.9 -0.8 -0.7 -0.6 -0.5 -0.4 -0.3 -0.2 -0.1 0 3.3 3.4 3.5 3.6 3.7 3.8 3.9 4 Following tables show information on Facebook Ine's executive compensation and stock price. As shown in the Tables, the CEO of Facebook Inc received a salary, bonus, and stock options in 2012. Company name Facebook Inc Date Share price Fiscal Year 2012 May 2012 $29.60 CEO Mark Zuckerberg Jun. 2012 $31.10 Salary $ Jul. 2012 $21.71 Bonus S Aug, 2012 $18.06 Options awarded in November 8, 2005 shares Sep. 2012 $21.66 Total options owned in 2012 shares Oct. 2012 $21.11 Total stocks owned in 2012(exclude options) shares Nov. 2012 $28.00 Exercise Price (K) $ Dec. 2012 $26.62 Total shares outstanding 1.747.430,590 (A) 668,367,113 (B) Stock return volatility (0) 0.6423 Dividend yield (d) Risk-free rate: 1M T-bill at 12/2012 (1) 0.07 Maturity (T) Years to Maturity (T-t) years How much will Mr. Mark Zuckerberg's wealth (from the above compensation, which includes stock and option grants) increase for $1 increase in Facebook Inc's stock price (as of December 2012) (1) Find z (note: log.(26.62/0.06) = LN(26.62/0.06) = 6.0951) Roge()+(r-d+2)x(T-1) OXT- .. ZE Option delta (2) Find delta for 1 share of option Option Delta = (z) x e-dx(-1) = (3) Find increase on CEO's wealth for $1 increase in Facebook stock price (note: stock delta=1) $ Wealth increase = (Number of options)*(option delta)+(Number of stocks)*(stock delta) Normal Distribution Probability Density Function: $(2) = 2.1 xu where = = (u is the mean, c is the standard deviation) 1 Cumulative Distribution Function: 0(2)=L. VIR e dx Z z -4 -3.9 -3.8 -3.7 -3.6 -3.5 -3.4 -3.3 -3.2 -3.1 -3 -2.9 -2.8 -2.7 -2.6 -2.5 -2.4 -2.3 -2.2 -2.1 -2 -1.9 -1.8 -1.7 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1 1.2 1. (2) 0.000134 0.000199 0.000292 0.000425 0.000612 0.000873 0.001232 0.001723 0.002384 0.003267 0.004432 0.005953 0.007916 0.010421 0.013583 0.017528 0.022395 0.028327 0.035475 0.043984 0.053991 0.065616 0.07895 0.094049 0.11092 0.12952 0.14973 0.17137 0.19419 0.21785 0.24197 0.26609 0.28969 0.31225 0.33322 0.35207 0.36827 0.38139 0.39104 0.39695 0.39894 D(2) 0.0000317 0.0000481 0.0000723 0,000108 0.000159 0.000233 0.000337 0.000483 0.000687 0.000968 0.00135 0.001866 0.002555 0,00346 0.004661 0.00621 0.008198 0.010724 0.013903 0.017864 0.02275 0.028717 0,03593 0.044565 0.054799 0.066807 0.080757 0.0968 0.11507 0.13567 0.15866 0.18406 0.21186 0.24196 0.27425 0.30854 0.34458 0.38209 0,42074 0.46017 0.5 1.5 1.6 1.7 1.8 1.9 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 3 3.1 (2) 0.39894 0.39695 0.39104 0.38139 0.36827 0.35207 0.33322 0.31225 0.28969 0.26609 0.24197 0.21785 0.19419 0.17137 0.14973 0.12952 0.11092 0.094049 0.07895 0.065616 0.053991 0.043984 0.035475 0.028327 0.022395 0.017528 0.013583 0.010421 0.007916 0.005953 0.004432 0.003267 0.002384 0.001723 0.001232 0.000873 0.000612 0.000425 0.000292 0.000199 0.000134 0(2) 0.5 0.53983 0.57926 0,61791 0.65542 0.69146 0.72575 0.75804 0.78814 0.81594 0.84134 0.86433 0.88493 0.9032 0.91924 0.93319 0.9452 0.95543 0.96407 0.97128 0.97725 0.98214 0.9861 0.98928 0.9918 0.99379 0.99534 0.99653 0.99744 0.99813 0.99865 0.99903 0.99931 0.99952 0.99966 0.99977 0.99984 0.99989 0.99993 0.99995 0.99997 -1.5 -1.4 -1.3 - 1.2 3.2 -1 -0.9 -0.8 -0.7 -0.6 -0.5 -0.4 -0.3 -0.2 -0.1 0 3.3 3.4 3.5 3.6 3.7 3.8 3.9 4