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Google The Almighty Buck

Larry & Sergey To Cash In $5.5B of Google Chips 339

theodp writes "According to an SEC filing, Google founders Larry Page and Sergey Brin have adopted five-year trading plans to sell about 5M shares each, which would yield each about $2.75B based on Friday's closing stock price of $550.01. BTW, Google kicks in 12 cents to Social Security and another 2 cents to Medicare on its founders' celebrated $1 annual salaries." After this stock is sold, the founders will hold less than 50% of the voting shares and thus will give up voting control of Google.
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Larry & Sergey To Cash In $5.5B of Google Chips

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  • by linuxgurugamer ( 917289 ) on Saturday January 23, 2010 @03:25PM (#30872192) Homepage

    Even if they have less than 50%, if they have the largest block then in all likelyhood they will still retain control.

    • by nurb432 ( 527695 ) on Saturday January 23, 2010 @03:28PM (#30872228) Homepage Journal

      Only on paper. The other 50+ % could tell them to take a hike, as they change Google's direction into uncharted, less 'friendly' territories.

      The wind of change is coming, hide your data.

    • by Dr. Spork ( 142693 ) on Saturday January 23, 2010 @03:28PM (#30872230)
      Also, since Eric Schmidt isn't selling his shares, the three of them together will have far more than 50% of the voting shares. (reference [nytimes.com])
      • by derGoldstein ( 1494129 ) on Saturday January 23, 2010 @04:39PM (#30872766) Homepage
        You mean Mr. "If You Have Something You Don't Want Anyone To Know, Maybe You Shouldn't Be Doing It"? Sure, I'll sleep soundly tonight.

        He stayed on Apple's board long after he knew about the Android move, and he's usually the one pushing the "it's technically not illegal" line. I don't see that he's the best person anyone would like to leave their data with. IMO, prepare for more Facebook-esque pranks from Google in the near future.
        • by Gerzel ( 240421 ) *

          Oh? So you want people to know your personal writings, your bank account and financial information, perhaps a few embarrassing stories of your childhood shared between freinds, medical information etc.

          There are MANY things that are legal and non suspicious that someone might like to keep private and secret from the world at large.

        • by Anpheus ( 908711 ) on Saturday January 23, 2010 @09:14PM (#30874696)

          He said if you don't want Google to know something, don't tell it to Google. Which is an entirely different matter. Basically, as a US corporation they fall under US laws including ones that allow the government to subpoena them and other things. Now they've resisted every request for information, but if a judge says they have to fork it over, they have to do it.

          So don't tell Google information you want to remain private. It's that easy.

      • Re: (Score:3, Informative)

        by rumith ( 983060 )

        Even better: Google has two classes of shares: A and B, one having 10 votes per share and the other only one vote per share. Selling the 10-vote share automatically makes it 1-vote share. Larry and Sergey, unsurprisingly, have all the 10-vote shares.

        So, in order to have ultimate control over Google, the two only need to have 5% of all the shares, not 50%, as long as all the shares they own are B-class.

    • by wytcld ( 179112 ) on Saturday January 23, 2010 @03:31PM (#30872260) Homepage

      Yeah. Anything more than 30% (or less) is sufficient to control a large public corporation. The majority of stock in a corporation like Google is held by mutual funds, who do not typically actively engage in corporate control. So 30% is more than 60% of the stock held by individuals, who are more likely to claim a voice in corporate governance. IOW, they're keeping total control, for all practical purposes.

      • Re: (Score:3, Insightful)

        by iammani ( 1392285 )
        Unless those mutual funds are shell companies controlled by Chinese Govt. I have heard Chinese govt has enough shells to go unnoticed.
        • by vranash ( 594439 )
          The chinese are famous for their shell games :) Which shell is it under? That one? Noooo.
  • by solafide ( 845228 ) on Saturday January 23, 2010 @03:25PM (#30872196) Homepage
    Why does it matter if the founders are contributing to SS? They're hardly going to need to draw on it, so everyone else can continue paying in and later drawing out their money. Oh wait, that isn't how SS works? Drat.
    • Re: (Score:3, Insightful)

      Why does it matter if the founders are contributing to SS?

      It goes to show how Social Security tax is not only fundamentally flawed but regressive as well. It's a tax that mostly affects everyone except those with high wealth/income.

      • Not entirely. The amount you draw out of SS is proportional to the income you had while you were contributing, so their $1 income (for SS purposes) will result in smaller SS checks when they retire. How small, I couldn't tell you.

        • Maybe so but until the benefits start coming in a few decades down the line, the tax hurts the poor much more than higher incomes.

          • Would this be the higher incomes who get SS benefits reduced to zero because they have other income sources? These two will probably never see a penny from Social Security, even if they were contributing now.
            • by wizardforce ( 1005805 ) on Saturday January 23, 2010 @04:34PM (#30872728) Journal

              These two will probably never see a penny from Social Security, even if they were contributing now.

              As a 23 yr old, neither will I.

              • Re: (Score:3, Insightful)

                Unless of course they raise the cap on SS by like 10%. In which case it's fine.

                Social Security isn't in any great risk.

                • Re: (Score:3, Insightful)

                  by rolfwind ( 528248 )

                  Unless of course they raise the cap on SS by like 10%. In which case it's fine.

                  Social Security isn't in any great risk.

                  Where do you get this total bullshit? The former Comptroller General, David Walker, has been warning for years now that Social Security and Medicare will start eating us alive.

                  http://www.youtube.com/watch?v=OS2fI2p9iVs [youtube.com]

                  http://en.wikipedia.org/wiki/David_M._Walker_(U.S._Comptroller_General) [wikipedia.org]

                  • by jmauro ( 32523 ) on Saturday January 23, 2010 @05:27PM (#30873140)

                    Did you actually read what he said? It's not "Social Security and Medicare", it's just Medicare. And only Medicare.

                    And this is because our health care system has such screwed up incentives the costs are spiralling out of control system wide which is driving up the Medicare costs to levels that cannot be supported.

                    Since our government simply refuses to do anything to get the situation under control it'll what bankrupt us, not Social Security which has been 40 years away from bankruptcy for like the last 50 years (and even if and when the trust fund empties it'll be able to provide along the lines of 90% of the promised benefits).

                    They're being lumped together for partisan, idological reasons that have nothing to do with the fiscal stability of Social Security.

                    • Social security has functioned as long as it has because every 10 years or so, the fund is tweaked.
                      Raise the retirement age a year or two, increase the tax withheld, raise the cap on SS taxable income etc.
                      Social security tax is running a surplus right now but the vast majority of that is funneled into the federal budget.

                    • by jmauro ( 32523 )

                      While that was true in the earlier days of the program, the tax rates and benefits have not been adjusted, other than the max income subject to the tax to indexed inflation, since 1983. Even so, only very minor changes might be needed to ensure all the promised benefits are paid out.

      • by MPAB ( 1074440 )

        SS and progressive taxation affects qualified workers the most. And the most qualified non-financial workers make an average of less than 1/3M a year, of which half goes away in taxes. Some manage to get a huge cut on their taxes by appearing as societies of two, but most professionals are unable to do that due to the nature of their work.

        Thus, when taxes are raised "on the rich", it's your surgeon and not the CEO of the clinic they're talking about.

      • by Itninja ( 937614 )
        Not entirely true. I am making slightly more than $75K yearly (not even close to 'high wealth' for my region) and don't pay a dime to SS because I work for a non-profit that 'opted out' of the SS program when they started back in 1967.
        • Holy shit... they can do that? That would be awesome. Instant 7% salary increase (14% if they pass along their portion).

        • that would be fantastic if we could opt out of government programs here in australia. I'm one of those people the current government keeps insisting is one of the "rich", but when i'm bearly able to afford to buy a house to live in it hardly feels like it.

          i've worked hard my entire life, and will more then likely NEVER call on social security of any kind. i pay for private health cover as well. seems so unfair that i have to support all these blood suckers on long term welfare.

    • by sunking2 ( 521698 ) on Saturday January 23, 2010 @06:49PM (#30873816)

      I don't care so much about SS. It's capped anyway, and to within a hand grenades throw you pretty much take out only what you put in.

      However, what I don't agree with is them taking $1 and for the most part dodging an income tax. They aren't doing it to save jobs, like the CEO of Vale or Aspen or one of those who did the same thing. For these guys its all PR. The company can afford to pay them. And should. Instead it pays less taxes on that money than if it were on a personal income. All of the things that you and me pay for they are getting for free, or at a lower rate because they have the ability to be compensated in ways that have lower tax rates. It's good to know these guys have policemen and firemen protecting their millions in assets for free. It's good to know that the fighter jets that will protect them from the Chinese were not funded at all by these bozos (yes, a bit of tongue in cheek there but you get the point). These guys are dodging their civic duties for good PR and nothing more.

      What they should do is take hte salary and contrinute 100% of it to the national debt, or other charity.

      • Re: (Score:3, Insightful)

        by Jacked ( 785403 )

        And I think you should contribute 100% of your wages to me! In other words, it really doesn't matter what you think they should do with their money. It's theirs, not yours.

        But seriously, they aren't exactly getting a free ride in regards to public services such as police and fire departments. You have to keep in mind that Google employs tens of thousands of people. People that are earning high wages and paying lots of taxes. So, the founders are paying lots of taxes indirectly by employing thousand

  • We have seen that process over and over...

  • by Anonymous Coward on Saturday January 23, 2010 @03:26PM (#30872204)

    I think China should buy all these shares, then they wouldn't need to hack anything!

    • I'm not sure whether this should be modded "Funny", or "Insightful". Sure, it seems like a joke when you put it like that, but as a long-term, gradual, low-profile plan? I don't just mean Google, I mean any company that has more than 50% of its shares in fragments. They would need proxies, of course, and some way to mask the money trail. Is it that far-fetched for a government that employs hacking in such a blatant manner?
  • by ifwm ( 687373 ) on Saturday January 23, 2010 @03:27PM (#30872222) Journal

    Google has always appeared to me as a company that was moved by the vision of its founders. While the "do no evil" policy has been... flexible, there has always been a sort of philanthropic, "we get why you hate Microsoft, we want to be different" type of thing with Google.

    I wonder how long that will last with the founder no longer in control.

    • by Renraku ( 518261 )

      The founders will pretty much be in control. I don't think it'll end up being, "Well, sir, the shareholders say that we have to eat all these babies because the Chinese are going to pay a million dollars to televise it. So I've brought you some forks and napkins. Bon apetit!"

  • by Just Brew It! ( 636086 ) on Saturday January 23, 2010 @03:29PM (#30872236)
    The profits from selling of their shares will be considered income by the IRS, and taxed accordingly.
    • Re: (Score:2, Insightful)

      by Anonymous Coward
    • by nodwick ( 716348 ) on Saturday January 23, 2010 @03:39PM (#30872310)
      Except that money from capital gains are not subject to either Social Security or Medicare. Taxes for those programs are deducted from employment income, not investment income. Furthermore, capital gains tax rates are significantly lower than those for ordinary income - currently the former is capped at 15% [wikipedia.org], while the latter is 39% [wikipedia.org]. Not a knock on the Google founders specifically, but rather on the wealthy in general - as Warren Buffet has pointed out, our tax system is skewed so that wealthy folks like himself pay an effective tax rate of 17.7% [nytimes.com], while his secretary is taxed at 30%.
      • At least that's true for long term gains. Short term gains are ordinary income. So... as we approach the point where people have been holding a stock for more than a year (AFAIK, that's the definition the IRS uses), we get an interesting decision point. This has interesting implications for stocks having rallied off their lows, and this past week's drop in the market may be a manifestation of that since people who bought low in the late '08 crash can now cash out at the lower rate.

      • by Temujin_12 ( 832986 ) on Saturday January 23, 2010 @04:02PM (#30872496)

        ...as Warren Buffet has pointed out, our tax system is skewed so that wealthy folks like himself pay an effective tax rate of 17.7% [nytimes.com], while his secretary is taxed at 30%.

        Can someone please tell me why we just don't move to a simple flat tax rate? You make minimum wage? You pay X%. You're lower middle class? You pay the same X%. You're upper class? You pay the sam X%. You're the CEO of a fortune 500 company? You pay the same X%.

        This way politicians would have to upset everyone in order to raise taxes and couldn't single out certain groups based on which one is most likely to put up with it (or is unable to vote them out). If they want/need to increase taxes, it must affect ALL of their constituents.

        Also, as long as what is taxed is clearly defined, it makes tax codes a LOT simpler. Easier job for the IRS, accountants, employers, and employees.

        • by Trepidity ( 597 ) <[delirium-slashdot] [at] [hackish.org]> on Saturday January 23, 2010 @04:09PM (#30872538)

          Well, it depends on what you mean by "a flat tax". People pushing the flat tax, like Steve Forbes, have typically been pushing for a flat tax on wage and salary income, but that excludes capital gains entirely. One flat tax of x% for the working schmucks, and another flat tax of 0% for the trust-fund kids like Steve Forbes.

          If it were a flat tax that included capital gains, that might have a better chance of going somewhere, but the major flat-tax proponents have not been pushing that. Though even in that case you would have a bunch of entrenched popular deductions that people would try to pull in, like the mortgage-interest deduction, the deduction on money donated to charity, etc.

        • Re: (Score:3, Interesting)

          by bidule ( 173941 )

          Can someone please tell me why we just don't move to a simple flat tax rate? You make minimum wage? You pay X%. You're lower middle class? You pay the same X%. You're upper class? You pay the sam X%. You're the CEO of a fortune 500 company? You pay the same X%.

          If you need 20k to make ends meet and you get 30k, you won't be happy if the flat rate is 33%.

          If you need 40k to make ends meet and you get 100k, you won't be happy if the flat rate is 33%. But at least you'll be able to put away 25k for retirement.

          If you need 80k to make ends meet and you get 300k, you won't care if the flat rate is 33%. After all, you still get 120k to invest. After 5 years, you can more than hire a 30k maid just on interests, who still won't be able to make ends meet. {30k spent = 45k in

          • Re: (Score:2, Insightful)

            by bgarcia ( 33222 )
            The simple solution to that is to make everybody's first $A of income tax-free. Then charge a flat X% rate on all income above that.

            It'll never happen because the politicians use the tax code for control more than to raise funds.

        • by Conception ( 212279 ) on Saturday January 23, 2010 @04:46PM (#30872816)

          One reason is a flat tax, just as sales tax, has a more significant impact on the poor. If the tax rate is 10% and you make $100 a weak, the difference between 100 and 90 is pretty significant. If you make 10,000 a weak, the different between 9000 and 10,000 is far less significant. So, a flat tax is "fair" but only from a certain set of principles.

          • so just aim the flat tax at the highest level acceptable to low income earners? i agree though that just flat tax on earnings isn't the total solution, earnings on shares not tied up in retirement should be treated just like income. just like larry and serge are a prime example of how the system fails.
        • I think it's that the poorer you are the greater percentage of your income goes on essentials: housing, food for yourself, your family, clothing, transport, etc.

          As you become more wealthy, that percentage lowers, or you have to become greatly excessive in your consumption, gold-plated quails eggs on toast made from wheat rolled between the thighs of supermodels for breakfast every morning, etc. At any rate, it's unessential and so taxing someone to whom a penny has greater value (to them) the same as someon

        • by Graff ( 532189 )

          Can someone please tell me why we just don't move to a simple flat tax rate? You make minimum wage? You pay X%. You're lower middle class? You pay the same X%. You're upper class? You pay the sam X%. You're the CEO of a fortune 500 company? You pay the same X%.

          There's 2 major problems with this.

          The first problem is discretionary income, that is income past what is spent on taxes and living expenses. At the lower incomes most of the income is necessary simply for living. If someone is earning just barely enough for food, shelter, and clothing then a flat percent tax is a killer. Higher incomes have a much larger proportion of discretionary income.

          There's a simple answer for this: allow everyone a single deduction based on cost of living for their area. You then ta

        • by winwar ( 114053 )

          "Can someone please tell me why we just don't move to a simple flat tax rate?"

          (Special) Interest Groups. Also known as the voters.

          The tax code is used to influence and/or create policy. Want people to own homes? Then create an home loan interest tax deduction (loophole). Want to encourage long term stock ownership? Then create a capital gains tax deduction (loophole). Want to encourage X, Y, and Z. Then create create a deduction (loophole) for X, Y and Z.

          Pretty soon any flat tax will look just like o

        • by jmauro ( 32523 )

          It's not the rates that makes the tax code complex (it's like a page of the entire code), it's all the deductions, definitions of taxiable income and what's not that make it so complex.

          Most all of the supporters of the "flat tax" want a flat rate, but refuse to get rid of the deductions and non-taxible income sources.

          If you want a single rate on all income (wages, salaries, bonuses, capital gains, inheretance) no exceptions, no deductions that's one thing.

          Ireland does this quite well with a flat 12.5% tax r

    • Anything over 100,000 or so a year isn't taxed for Medicare/Social security. At ~15% up to 100,000 that's ~15,000 in taxes which to them is a nearly irrelevant sum. As for taxes on their sold shares, I believe that the IRS considers it taxable as capital gains which incurrs a tax of 20% (after the Bush tax cut sunsets)

      • It isn't taxed for Social Security after $110k (i think, it goes up each year), but it is taxed for Medicare. Medicare doesn't have a cap, you pay a percentage of everything that is "salary".

    • Re: (Score:3, Insightful)

      by superdude72 ( 322167 )

      Er... no. The profits will be taxed as capital gains. The top capital gains rate is 15 percent I believe, and there's no social security or medicare tax on capital gains. So they'll pay tax at a considerably lower rate than someone who works at McDonald's.

      • by JSBiff ( 87824 )

        Yeah, except the person paying income tax and FICA may be paying a lower *rate*, but seriously, 15% of $2.5 Billion is 300 Million Dollars. As for there being no SS/Medicare on the capital gains taxes, does that really matter? Money is liquid - like water, it will flow to the lowest point. When Congress starts coming up short of money for SS/Medicare, they will move money around as necessary, I would think. In any case, Congress 'borrowed' money from SS for many years, so it needs all the 'general' tax reve

  • Holy crap! (Score:4, Funny)

    by EnsilZah ( 575600 ) <EnsilZahNO@SPAMGmail.com> on Saturday January 23, 2010 @03:58PM (#30872466)

    They're liquidating their assets and moving to their moonbase!

  • by Geminii ( 954348 )

    What are they planning to do with the money? Simply kick back and relax? Or now that Google's reached cruising speed, are they likely to be looking around for new challenges?

  • Terrible (Score:2, Insightful)

    This is crazy. Why are they giving up majority control? I've heard people complain endlessly about how Google could turn into another mindless, profit-at-all-costs-seeking corporation like Microsoft, but I was always secure in the knowledge that the founders had voting control. I just don't understand this. Google rakes in billions in pure profit every year. How could they possibly need more money?
  • I smell a Rat (Score:3, Interesting)

    by Avalon's_Avatar ( 736690 ) on Saturday January 23, 2010 @05:29PM (#30873162)

    Trouble in China followed by the two principals cashing in stock? Something's going down.

  • The wave has crested (Score:4, Interesting)

    by dave562 ( 969951 ) on Saturday January 23, 2010 @05:31PM (#30873178) Journal

    It's all downhill from here. I wouldn't say that Google's endeavors beyond search have been complete failures. I wouldn't call them raging successes either. The time is coming in the next few years when people are going to take a long and hard look at Google's valuation and begin to ask, "Where is the value?"

    For all of their side projects and initiatives and ideas, Google seems to be little more than the most successful (so far) advertising resource on the internet. It isn't hard to imagine Google holding onto their lead in search, and that will continue to generate revenue for them. Beyond that, what are they really going to do that justifies their $500+ per share stock price? Cellphones, netbooks, tablets? Google Apps?

  • by cenc ( 1310167 ) on Saturday January 23, 2010 @05:54PM (#30873394) Homepage

    Sorry, people but large shareholders file SEC notices like this all the time, but that does not obligate them to sell. It just allows them the option to sell.

  • by Ritchie70 ( 860516 ) on Saturday January 23, 2010 @08:36PM (#30874508) Journal

    So their share of Google, between the two of them, falls below 50%.

    Unless it falls significantly below 50%, a wide array of other parties would have to be in agreement, and against them, for them to not have control. Unless they start screwing up, that is unlikely to occur.

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