Contribution #8: Google's "One-to-One" Exchange Program

In Chapter 12, there is an article about Google and how in 2009 they issued an exchange program that would allow employees to exchange their stock options that were “underwater.” This means that since Google, as most companies did in the stock market, took a significant hit in stock price, the employee stock options were essentially worthless. The main point of stock options is to provide incentive to employees and increase retention of key executives and employees. Google therefore allows employees to exchange their current stock for the current market value of the stock. The employees benefit from this because if this stock option matures back to the previous stock price that was 58 percent more than what it currently is, they will receive more compensation. In doing so, this allows Google to retain those crucial employees and continue to recruit the best. However, Google does take a financial hit for this decision. It was estimated that they would accrue a $460 million expense in order to satisfy their employees. I found this to be a telling measure of what Google thinks of its employees and the ethical standards which it upholds. Of course the expense was eye-popping, but then I looked up Google’s current financials and found that in the last 12 months they have sales over $27 billion and income over $7 billion. Not surprisingly, the employees who took part in the exchange program see a stock price of $616 today. I think I would be more than willing to go to work for Google.