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Google Offers Innovative Stock Option Scheme
PreacherTom writes "In a bid to breathe new life into scandal-tainted stock options, Google plans to give employees a novel method of cashing in their options. The search giant will let employees sell their vested stock options to selected financial institutions in an auction marketplace it's setting up with Morgan Stanley. In the last year, employees and employers have been 'punished' by the IRS with new rules requiring options to show up as an expense on the bottom line. This has caused companies to tone down the granting of options. Google's move could once more significantly change compensation for employees in many industries, including tech." The new plan is intended only for Google employees, not executives. Google's motive is not saving money but rather continuing to retain employees with stock incentives in the face of considerable price volatility.
Well essentially they are, as most people under value their stock options. In Google's case viewing a 2 year option at intrinsic value is a substantial undervaluation. To give you some idea an option with a strike price of $600 (well above that of any employee stock options) is worth about $70/share, but good luck convincing the employees who got a grant with a strike of $500 or more.
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
"...maybe they could just pay them more." But then you're missing the whole point on incentive based compensation. Giving stock options provides an incentive to work harder and improve the performance of the company. If you've ever been a manager you'd know that giving the same old raise every year does little to motivate employees, but when workers see a direct correlation between their effort and organization performance they can become great employees and have higher job satisfaction.