Remember that ”Transferable Stock Option” program that Google announced last December? Well, apparently it kicked off in April. And in a 10-Q filed on Thursday, the company announced some details about how it worked.
For the three months ending June 30, employees auctioned off 353,593 shares and raised a total of at a total value of $90.7 million, or $256.58 per share. So what does that mean?
Let’s say the strike price for your Google option is $200 and the stock is trading at $500. So really, it’s worth $300 to you, right? Under the TSO program, that employee can use an online tool to auction that option to financial institutions who might be willing to pay that employee more than that $300 spread, essentially betting that the stock will rise even further over time. You get more money now, the bank gets more money later. Maybe.
So in this case, the filing tell us that bidders were on average willing to pay $256.58 for each option, their view of what the spread is worth. It’s also telling us that based on that amount, each option auctioned off by a Google employee brought them $30.25 more per share than they would have gotten if they had just exercised their option and sold it on the market.
Got it? Okay, class dismissed.
