Google Inc will unleash employee stock options so they can be sold to a select group of investors, opening a new moneymaking channel for rank-and-file workers at the expense of lowering the online search leader's earnings next year.
The company announced the planned shift to "transferable" stock options late on Tuesday, several months before the change takes effect.
The unique program is meant to make it easier for employees to assess the value of their stock options -- a staple of most compensation packages in Silicon Valley.
With the switch, Google is hoping to make itself an even more appealing place to work than it already is by feeding employees with free daily meals and ample opportunities to get rich off the company's high-flying stock.
Recruiting talented employees and retaining them is a top priority for Google because it's in the midst of a hiring spree that is expected to continue for several more years. Since the end of 2004, Google has been hiring an average of about 10 new employees per day to expand its payroll to nearly 10,000 employees.
"We think this will be very valuable in helping our employees understand what they own right from the beginning," said Dave Rolefson, Google's equity and executive compensation manager.
It marks the first time that a major US company has established an ongoing market where employees will be able to sell their options to sophisticated money managers looking to hedge complex financial bets.
"Other companies are going to follow suit because it's a good idea," predicted Brian Hall, a Harvard University professor of business administration who has studied the advantages of transferable stock options.
"It's an exciting concept," said Arthur Levitt, a former chairman of the Securities and Exchange Commission who is now a senior adviser for the Carlyle Group.
Only stock options issued since Google's August 2004 initial public offering will be given access to an online market to be managed by Morgan Stanley.
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