To: Lizzie Tudor who wrote (67280 ) 3/9/2005 4:54:39 PM From: GVTucker Read Replies (1) | Respond to Lizzie, RE: wrong- Google did not expense EMPLOYEE options. They were forced to expense options that were used in payment to services already rendered like headhunter fees. secinfo.com Stock-Based Compensation. We have granted to our employees options to purchase our common stock at exercise prices equal to the fair market value of the underlying stock, as determined by our board of directors, on the date of option grant. For purposes of financial accounting, we have applied hindsight within each year to arrive at deemed values for the shares underlying our options. We recorded the difference between the exercise price of an option awarded to an employee and the deemed value of the underlying shares on the date of grant as deferred stock-based compensation. The determination of the deemed value of stock underlying options is discussed in detail below in “Critical Accounting Policies and Estimates—Stock-Based Compensation.” We recognize compensation expense as we amortize the deferred stock-based compensation amounts on an accelerated basis over the related vesting periods, generally four or five years. In addition, we have awarded options to non-employees to purchase our common stock. Stock-based compensation related to non-employees is measured on a fair-value basis using the Black-Scholes valuation model as the options are earned.
