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Technology Stocks : Google Facts Zone
GOOG 279.63-2.0%Nov 7 9:30 AM EST
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From: Doren3/6/2009 7:21:13 PM
   of 3618
 
Stock Market Slump Could Enrich Google Workers

nytimes.com

To boost morale and retain workers, Google is giving them a second chance to profit from millions of stock options that were doled out in better times. The value of those options has crumbled as the economy has plunged into its worst recession since the early 1980s, leaving the stock market in shambles.

Google is trying to erase those losses by offering to reset the exercise price on most of its outstanding stock options. The new exercise price, which is an employee's cost for redeeming the option, will mirror Friday's closing price of $308.57 for Google's stock.

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While they please employees, stock option repricings aren't popular among shareholders who don't get the same opportunity to erase their losses.

Besides raising issues of fairness, repricing programs threaten to lower future earnings per share because companies will need to issue more outstanding stock when the options are cashed in.

The repricing programs also can result in substantial charges that lower reported earnings. For instance, Google expects to absorb $400 million in charges during the next five years to account for the costs of its option repricing. And that estimate was based on the assumption that the stock options would be repriced at about $350 rather than $308.57
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