After reading Paul Kedrosky on Google’s new Transferable Stock Option plan I took a peek for myself. It sounds neat for the employees – they can sell their vested options to banks instead of exercising them, potentially earning a premium due to the time value of the options. (The ability to hold onto the options for potential future gains is worth something.)
Kedrosky points out that by giving a select group of institutions knowledge of Google employees’ option-selling plans, they’re getting access to information the rest of us aren’t. But there’s additional ways this program conveys information to institutions that seem even more revealing. From the TSO FAQ:
Will there be periods when Google employees cannot sell their options in the TSO program?
Yes. The TSO program will active during regular NASDAQ trading hours when Google’s trading window is open. When Google has material, non-public information, we will shut down the TSO program until the information is no longer material or the second day after the information has been made public. Google employees will not be given advance notice of these shutdowns.
When Google has this material, non-public information, they’re also barring their employees from selling shares obtained from exercising their options in the traditional manner. A bit more restrictive than other companies, but that’s what you get when you’ve got such an open intranet.
You and I can’t easily see when Google employees can or can’t sell their shares, but the institutions participating in the TSO program are going to see when it’s not available to them – which is a big red flag that Google’s got some material, non-public information, and they’re expecting some market volatility in the near future. If I were an individual investor, I’d definitely want this information as well.
In other news, I’ve got to move this blog to another webhosting company. This one’s been timing out on me like a bastard, to the point where it’s interfering with my desire to write.
