Normally, you have to wait a year or more to vest and then exercise stock options. But Google is setting up a market that will let people sell their options basically anytime they like.

What does this mean?

• Google just got a lot more appealing for people who dread the commitment of 5 years of employment before getting a payout.
• Google is now that much more attractive than say Yahoo or Microsoft, or any company which doesn't have this program.
• Current Google employees are gonna be spending a lot of their money sooner!

Basically, as those two Irish guys in the Guiness Beer ads say: BRILLIANT!

Once again, Google out-innovates the competition. And this time it's in the human-capital arena. It'll be fun to watch as the rest of the world figures out what this means.

A side-benefit: we'll be able to see which other companies are even close to awake by how fast they announce a copy of this program. It doesn't hurt to have a stock that keeps going up, though.

Update: Some blogs seem to think that this program is only valuable to those whose options are underwater - i.e. the option strike price is higher than the current share price.

While that is true, it overlooks the time value of the option. It's also possible that an employee option that's in the money (say with a basis %10 less than the current stock price) is worth MORE than the price differential of the option and shares.

I.e. Potentially even for in-the-money options you could make more by selling the option than by exercising it and pocketing the difference.

So the program really does two things:

• Makes explicit the time value of the option.
• Gives employees with vested options more opportunities for monetization

It's simplistic to opine that this program is some sign that the Google financial people think the stock isn't going up anymore...

¶ 12/13/2006