Employees win in Google stock option swap

As part of Google’s Q4 earnings call yesterday, the company announced a new stock swap program for its current employees, 85% of whom saw their options sink under water during the past two quarters. Stock options have always been a strong talent lure for Google, and as it continues to make hard choices in terms of cutting projects and recruiters, staff retention had to be feeling the strain. Considering the economy, the program is generous, and shows that perhaps Google isn’t yet abandoning its mythical corporate culture.

According to CEO Eric Schmidt, the new swap plan is a voluntary one-for-one stock option exchange that lets employees exchange all or part of their options for the same number of options between Jan. 29 and March 3, with the new exercise price equal to the closing price per share of its common stock on March 2. In other words, employees can trade now-worthless options for ones with true market value. It’s a good deal.

With 85% of employee stock options under water, perhaps Google had no choice but to come up with the plan. But it shows that the search giant continues to invest in its employees, despite the economic downturn. And that’s a wise course of action. It will need all the talent it can get–and keep–to ensure the company stays strong over the long term.

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