Google Offers Workers Novel Stock Auction Program - InformationWeek

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Google Offers Workers Novel Stock Auction Program

The search engine giant will add a twist to traditional stock option plans offered by Silicon Valley companies.

Google next year plans to let employees auction off vested stock options to financial institutions, providing another way they can make money off the company's coveted shares.

Under the program, the rank and file would be able to put options up for bid through a Web site operated by investment banker Morgan Stanley. Only financial institutions meeting certain criteria would be able to participate.

In offering the compensation plan, Google adds a twist to traditional stock option plans offered by Silicon Valley companies. Employees are typically given the option to buy stock at a fixed price in the future, making money, at least on paper, when the stock rises above that price.

Google would continue to offer typical stock option plans, but the auction would provide a chance for employees to sell their stock at a premium, since financial institutions would be expected to make bids based on the potential value of the stock over time. Financial institutions would have up to two years to cash in the shares.

The program, announced Tuesday, wouldn't be available to Google executives, and would only apply to shares awarded after the search engine's initial public offering. "This program represents an innovative way to compensate employees and will increase the efficiency of Google's equity compensation by increasing the per-option value of employee stock options," the company said in a statement.

Google expects the program to go into effect in the second quarter of next year. The offering is anticipated to be an added expense to stock-based compensation, which means it could affect the company's reported profit. An estimate of its impact wasn't disclosed.

Google's share price at 2:15 on Dec. 13 was $479.08.

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