Google Stock to Drop

Maybe there weren’t shouts of “down, baby, down.” But on Google campuses across the world on Friday, many employees were no doubt hoping the company’s shares would drop.

That’s right, drop.

That’s because Google is using the closing price of its shares on Friday as the exercise price for a new set of stock options it is offering to all its employees under an exchange plan. The voluntary plan allows employees to exchange their existing stock options, most of which are underwater, for new ones with a lower exercise price — the price that employees have to pay to convert their options into shares. The lower the exercise price, the bigger the chance for employees to make money if Google shares rise over the term of their options.

Google’s shares have lost about 60 percent of their value since their November 2007 peak of more than $740. In announcing the plan in January, Eric E. Schmidt, the chief executive, said that about 85 percent of employees had options with an exercise price that was lower than the value of Google’s shares.

Many shareholder advocates frown on employee stock option exchanges, as they amount to a transfer of value from shareholders to employees. Google said its plan would cost the company, and its shareholders, $460 million. Some advocates criticized it for some of its terms.

Read More


Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s