MOUNTAIN VIEW, Calif., December 12, 2006 - Google Inc. (NASDAQ: GOOG)
announced today a program that will enable employees to sell vested
stock options in an online auction. Under the Transferable Stock Option
(TSO) program, employees will still be able to exercise their options,
but will also be able to sell their options to financial institutions
as an alternative.
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. Google will
amend the terms of eligible employee stock options to make vested
options transferable. The auction will be managed by Morgan Stanley.
Smith Barney will serve as the employee stock option administrator.
Google is working with multiple financial institutions to participate
as bidders in the auction.
The ability to sell options is not a novel concept - today people can
buy and sell options to purchase Google stock and the stock of many
other companies on the public markets. What is novel is that Google is
extending this ability to trade options to employee stock options. If
an employee chooses to sell options in the TSO program, he or she will
use an internal online tool built by Morgan Stanley to sell them to the
highest-bidding financial institution. The financial institutions
buying the options will then likely hold them until maturity and then
settle with Google.
Google's employee stock options typically have a ten-year term from
the grant date. Under the TSO program, Google's employee stock options,
upon transfer, will have a lifespan of the lesser of two years or up to
the remaining term under the original grant.
Google expects this program will go into effect in the second quarter
of 2007. Only stock options issued since Google's initial public
offering will be eligible for this program, and Google's Executive
Management Group may not participate in the program.
This program will not result in a change to the accounting method used
for employee stock options. However, in the near term Google expects
that the amount it recognizes as stock-based compensation will be
greater than it would otherwise have been after the program goes into
effect.
Google has discussed the TSO program with the Securities and Exchange
Commission, and Google will ensure the program complies with applicable
securities laws.
For more information about this new program, please visit the Google
Blog at http://googleblog.blogspot.com