Google Owes You $1.5 Billion

By
Tim Beyers


September 28, 2009
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Comments (24)

Evil has a price: $1.5 billion.

Google's (Nasdaq: GOOG)
options repricing plan, originally estimated to cost $460 million, has
created $1.5 billion in wealth for employees who benefited from the
plan, The Wall Street Journal estimates.

Anyone else sickened by this? Scandalous stock options plans are nothing new. We've seen repricing in action at eBay (Nasdaq: EBAY), Williams-Sonoma (NYSE: WSM), NVIDIA (Nasdaq: NVDA), and MGM Mirage (NYSE: MGM), among others.

But Google was supposed to be bigger than this. Google was supposed
to be the company that did no evil. Sorry, Larry and Sergey, but options repricing is evil; it's a wealth transfer from shareholders to employees.

What's most galling in this case is that Google got lucky. According to the Journal
report, the Big G in March exchanged 7.6 million options at an average
exercise price of $522 for an equivalent number priced at $308.57. Six
months later, employees who saw only a deep shade of portfolio red are
now sitting on a better-than-60% gain.

Great work, Google. Good for your employees.

Now, what about the shareholders you left out in the cold? Remember,
that $460 million you set aside for repricing was taken straight from
equity that belonged to your investors. How will you repay them?
Perhaps issue a one-time dividend?

Employees shouldn't be    http://www.fool.com/investing/general/2009/09/28/google-owes-you-15-billion.aspx