
Google employees get huge option break - gibsonf1
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/03/07/BUQO16AOQA.DTL
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thwarted
_While stock option repricings please employees, they aren't popular among
shareholders, who don't get the same opportunity to erase their losses._

How is stock option repricing erasing losses? Those with options have not
exercised them yet (otherwise they'd be stock holders, not option holders), so
they have not taken any risk against which gains or loses could be considered.
If the employee considered the options as a significant part of their
compensation, then I guess there is a loss in terms of time or opportunity (as
in they could have worked somewhere else for different option terms), but it
is also in the current share holders' best interest to keep employees happy
and not bailing because they had a reduction in a certain kind of potential.

 _Google workers had an incentive this week to root for the company's shares
to decline, lowering their exercise price and boosting the potential payout
they could reap later._

Only if the stock price reverses its trend and starts going up -- it's been on
a downward trend for over a year, and I doubt it's going to back to its $700
high any time soon.

If they don't reprice the options and an employee does exercise them (they'd
be stupid to do so) and then sells, the employee LOSES money on the
transaction. Even if you aren't that stupid, it doesn't send a good message to
the employees that the company, and their contribution, is worth something.
This is a much greater threat to the company than workers rooting for a stock
price decline for a week, especially considering that the employees will be
rooting for it to go up after the new strike price is set.

~~~
gaius
It is also true that if you were an ordinary retail investor who bought at
$700, you haven't "lost" anything until you try to sell at $300. That's what
the article is getting at.

Option repricing is a moral hazard; the point of options is that it aligns the
interests of employees with the interests of the shareholders (who are the
owners of the company). A situation in which the employees _want_ the stock
price to go down is directly contrary to that supposed alignment, and once
repriced, the incentive to claw back to the original price is reduced.

------
gaius
_While stock option repricings please employees, they aren't popular among
shareholders, who don't get the same opportunity to erase their losses._

Frankly any outsider with Google common stock - which has no voting rights,
and pays no dividend - is a chump. The _only_ reason to own such stock is to
flip it.

