Eric Schmidt to Googlers: Don’t wait on option exchange

Two weeks ago, we footnoted about Google’s (GOOG) option exchange program which allows employees to trade in their underwater options for new ones — something that impacts about 85% of all employees. But judging by this email from CEO Eric Schmidt that was filed yesterday, there doesn’t appear to have been a stampede to exchange those underwater options:

Dear Googlers,

January 14, 2009 was an important day for Google employees … that Wednesday, the Board of Directors approved a stock option exchange program for Googlers.

Everyone on the management team was excited to get this done. We have spent a lot of time discussing and thinking about how to reward employees for their hard work and creativity—and this is a question that many of you have raised through Googlegeist and directly with your managers. By offering Googlers a one-to-one option exchange, where underwater options can be exchanged for an equal number of options at a lower strike price, we hope to give you a better starting point for your stock-based compensation and so improve your chances of creating value from those options.

I recommend that you take the time to educate yourself about the program by looking at this site. If you decide to participate, you—ll need to go to the election tool and submit your options before 6 AM Pacific Time on Monday, March 9th (i.e. early in the morning on Monday).

There are 20 days left in the offer period, but don—t put this off until the last minute. It’s an important decision, and one you should give your full consideration.

Thanks very much!


This, despite the fact that when it rolled out the program two weeks ago, Google provided all sorts of information, including a 10 page presentation with different scenarios, a detailed prospectus and a video.

While investors usually don’t like option exchange programs, as this Reuters article from earlier today notes, we’re guessing most Googlers are simply too busy to pay much attention. After all, with the deadline set for 6 am on March 9, there’s still over two weeks to make a decision. And, given the modest rally the stock has had in a decidedly down market, maybe some employees are betting that the options will come up for air.

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Image source: Paul Sakuma/Associated Press