Sunday, December 20, 2009

Google workers see huge potential windfall

"When stock prices rise, options can be lucrative. Every option is given an "exercise" price when granted, reflecting the amount that employees can buy shares at a later date. That is usually the price of the company's stock when the option was granted.

The benefit of stock options falls apart when share prices decline, because the exercise price is higher than the current stock price. When options are considered "under water," they offer no value to employees because they can't cash them in for a profit."

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