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Lisa Napoli Dec 13, 2006

KAI RYSSDAL: Here’s a problem we don’t have at Marketplace:How to calculate the value of our stock options.That’s of course ’cause we’re not a publicly traded company.On the other side of the spectrum is the Silicon Valley darling Google.Where stock options are a big part of the compensation.Google says starting in the second quarter next year, it’s going to let employees sell their options.Marketplace’s Lisa Napoli explains why:

LISA NAPOLI: The idea with stock options is after a certain period of time, employees can cash them in to buy company stock. But since the value of those options can increase or decrease over time, they’re a gamble against the future. Brian Hall of Harvard says that isn’t necessarily attractive to employees.

BRIAN HALL: Do you really want to try to attract, retain and motivate people with theoretical value?So that’s the main problem with stock options.

Hall says now Google’s trying to make the value of those options more concrete. The company’s setting up an online auction — open only to financial institutions — so employees can put their options up for sale. Kevin Delaney of the Wall Street Journal says that could make the options even more valuable to employees.

KEVIN DELANEY: Well it turns out that financial institutions are probably willing to pay more for a stock option than an employee can get by exercising the option on their own.

At least that’s what Google’s hoping.

Ted Buyniski of Radford Consulting says this is the first time a company has set up a program like this. And he says Google is the perfect testbed. After all, it’s infamous for its perks — like free gourmet food.

TED BUYNISKI: This is the logical progression from a great cafeteria.

Google has hired ten people a day since it went public in 2004 and now has nearly ten thousand employees. Buyniski says giving another option for the options could make Google more attractive to new recruits.

In Los Angeles, I’m Lisa Napoli for Marketplace.

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