Google Options

Stop me if you heard this before. Google is trying his hand again at financial innovation with their attempt to create a market for employee share options. The theory is sound. Many employees do not recognise the real value of their options, so allowing them to be sold in a transparent market, once vested, would demonstrate their value. It should also help Google recruit those who are worried that the company’s amazing share price run has left little upside. But it also sends a worrying signal, as Financial Times points out today:

Options are meant to give employees an incentive to work hard and remain with a company in the long term. Under this scenario, employees would be able to crystallise part of the value of the future years of an option right now.

That is hardly the best way to keep people when things get less rosy. And they will.