Larry & Sergey To Cash In $5.5B of Google Chips

theodp writes "According to an SEC filing, Google founders Larry Page and Sergey Brin have adopted five-year trading plans to sell about 5M shares each, which would yield each about $2.75B based on Friday's closing stock price of $550.01. BTW, Google kicks in 12 cents to Social Security and another 2 cents to Medicare on its founders' celebrated $1 annual salaries." After this stock is sold, the founders will hold less than 50% of the voting shares and thus will give up voting control of Google.

Comments

The SS/Medicare comment is pointless

[Just Brew It!]

The profits from selling of their shares will be considered income by the IRS, and taxed accordingly.

Re:The SS/Medicare comment is pointless

[bnenning]

Um, no.

In 2007, the top 1 percent of tax returns paid 40.4 percent of all federal individual income taxes and earned 22.8 percent of adjusted gross income.

Re:The SS/Medicare comment is pointless

[Scooby Snacks]

No, but if you only have $90 to live on for a week, that extra $10 can make a huge difference in meeting your basic necessities. Maybe you'd have to skip a couple (home-cooked) meals in order to pay all your bills, or perhaps you'll only have half of the money for your electricity bill at the end of the month. Now imagine that you have $9000 to live on for the week. That extra $1000 isn't going to determine whether or not you'll be able to eat at every meal this week, or whether you'll be able to keep the lights on. Perhaps you'll be able to buy an extra computer this week, or a cruise next month, but you're not going to have to skip meals or otherwise go without the basics.

This is why most modern governments have a system of progressive taxation, which, just so we know we're talking about the same thing, means that the more you make, the higher your income tax rate becomes. In the US, you're taxed only 10% on your first $8,000 or so if you're filing as single (although deductions and credits often reduce this amount further), and then your next $25,000 or so is taxed at 15%, and the rate continues to increase on increasing amounts of income. (See also this.)

Such a system of taxation has been endorsed by that notorious commie Adam Smith: "It is not very unreasonable that the rich should contribute to the public expence, not only in proportion to their revenue, but something more than in that proportion."

To restate the first paragraph in a different way, an additional 1/9 of your income goes much farther when you're making very little than when you're making very much. I hope this explains why there is no crack and no cognitive dissonance required to say that the difference between an income of $90 and $100 is much more significant than the difference between incomes of $9,000 and $10,000.

Re:The SS/Medicare comment is pointless

[PCM2]

Until Bush's tax cuts expire later this year and Obama doesn't renew them and then NOBODY invests in the stock market because the risk just isn't worth it when 35% of your investment gains are taken away.

I trust Warren Buffet's insight more than I trust yours:

I've been around rich people all my life. And I have seen capital gains taxes close to 40 percent. No one went home at 3 in the afternoon and said, "I've worked enough, and because tax rates are so high, I think I'll go to the movies." I mean, people want to maximize their after tax income, and there's two ways to do it: Increase their income, or get Congress to lower the tax rates for them. But I have never seen anybody with capital say, "I'm going on strike. I won't invest." I've been managing capital for 50 years for other people. No one left and said, you know, "The taxation system's too tough. I think I'll just stick it all under my mattress." They can't stick under their mattress. They're going to invest their money regardless.

Re:The SS/Medicare comment is pointless

[PCM2]

Buffet is a guilty dipshit, he feels bad for being rich. He's also stupid, I don't care how rich he is.

Class A shares in Berkshire Hathaway (Warren Buffet's investment firm) trade for $105,000 apiece. That's 190 times the price of a share of Google stock. I don't care how rich they are, nobody gives that kind of money to someone stupid.

Better Link

[beakerMeep]

Android makes impressive gains in Q4

They went from 1% to 16% in a year.

Re:Why do I care about Google contributing to SS?

[CheeseTroll]

Exactly. Some school systems (or teacher unions, whatever) are run this way - no SS, in exchange for a guaranteed pension.

SEC filing does not = selling

[cenc]

Sorry, people but large shareholders file SEC notices like this all the time, but that does not obligate them to sell. It just allows them the option to sell.

Re:Why do I care about Google contributing to SS?

[wizardforce]

The VAT tax as well as other forms of consumption taxes are inherently regressive in nature. The APT tax may be a better system.

Re:They will still control Google

[poopdeville]

Mutual funds have a fiduciary duty to exercise control of their shares in their fund holders interests.

They will still be in voting control

[Ritchie70]

So their share of Google, between the two of them, falls below 50%.

Unless it falls significantly below 50%, a wide array of other parties would have to be in agreement, and against them, for them to not have control. Unless they start screwing up, that is unlikely to occur.

Re:They will still control Google

[Anpheus]

He said if you don't want Google to know something, don't tell it to Google. Which is an entirely different matter. Basically, as a US corporation they fall under US laws including ones that allow the government to subpoena them and other things. Now they've resisted every request for information, but if a judge says they have to fork it over, they have to do it.

So don't tell Google information you want to remain private. It's that easy.

Re:They will still control Google

[RealTime]

Nope. One Class B share becomes one Class A share. The voting strength decreases from 10 votes per share (Class B) to 1 vote per share (Class A). All of the early Google option grants (not just the shares owned by the founders) are Class B. One of the conditions in the option grants of Class B shares is that they cannot be sold without first being converted to Class A shares.

Re:They will still control Google

[rumith]

Even better: Google has two classes of shares: A and B, one having 10 votes per share and the other only one vote per share. Selling the 10-vote share automatically makes it 1-vote share. Larry and Sergey, unsurprisingly, have all the 10-vote shares.

So, in order to have ultimate control over Google, the two only need to have 5% of all the shares, not 50%, as long as all the shares they own are B-class.

Re:Why do I care about Google contributing to SS?

[pclminion]

These guys are dodging their civic duties for good PR and nothing more.

You are a moron. See the opinion of the Supreme Court, Gregory v. Helvering . I quote: "The legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether avoid them, by means which the law permits, cannot be doubted."

You are a whiner who doesn't like the fact that other people are far more successful than you. "Civic duty?" Yeah, Page and Brin certainly haven't contributed anything meaningful to society... It's not like they invented an Internet search engine or something like that, right?