Google Offers Employees Underwater Options Exchange - 26 Jan 2009

Google Offers Employees Underwater Options Exchange

http://www.planadviser.com/investing/article.php/3564

Rebecca Moore – 01/26/2009

After
announcing its first-ever decline in quarterly profit last week, Google
Inc. said it is allowing its employees to swap their stock options for
new ones that will give them a better chance to profit from their
holdings.

The company
outlined the exchange program last Thursday in its fourth-quarter
earnings report. According to the Associated Press, Google shares ended
Thursday at $306.50. The new options are expected to be priced on March
2.

The exchange program is scheduled to start January 29 and expire March 3.

Google said it is making the gesture to give
employees greater incentive to remain at the company and work toward
helping the company reach its goals.

The AP said a 47% drop in Google's stock price
during the past year drove its decision to give employees a chance to
turn in options that have been awarded during the past few years. As of
September 30, about 8 million of Google's 14.3 million outstanding
stock options had an exercise price of at least $400, leaving roughly
17,000 employees with options that are "underwater," or unable to be
cashed in now at a profit.

Google will have to absorb another hit to earnings
to pay for the new options being made available. Management expects the
accounting charge to be about $460 million, assuming the new exercise
price for the options is around $300, the news report said.