Google and Other Tech Firms' Repricing a Boon to Employees

Last March, Google exchanged more than 7.6 million employee-held options with exercise prices above $500 for options priced at $308.57. Three-quarters of Google's employees were affected. In exchange for a lower strike price, each agreed to a delayed vesting schedule. As I write this, Google stock is worth almost $600 per share. Some analysts say this could create as much as $2 billion in value for employees if they meet the vesting rules and Google stock does not fall again. (Google took a $500 million accounting charge in connection with the repricing.) While Google is the most dramatic case, 15 other technology companies repriced options during the first nine weeks of 2009. Ten of those 16 have seen dramatic gains in their stocks since, according to compensation research firm Equilar Inc. Google, like most of the other companies, restricted the repricing offer to nonexecutives. Because it was more generous than most companies' repricing offers, the Google repricing in particular has annoyed many pundits and investor groups, who argue that shareholders don't get a "do-over."