After receiving tens of millions of dollars when he cashed out his Google stock options, Aydin Senkut knew he had enough money to quit his job and start a new chapter in this life.
"Google money gives you a comfort level," said Senkut, a senior product manager at the Mountain View, Calif.-based search giant, who left in April 2005 after nearly six years with the company. He hasn't retired, though. Senkut has been plowing some of his Google money into start-ups. The windfall has also allowed him to visit his parents in Turkey for several months, and purchase his childhood dream car: a Lamborghini — in orange. "I just wanted to get it in a color that was fun," he said.
Senkut is one of an estimated several thousand "Googlaires" — current and former employees who have earned at least $1 million from the sale of their Google options. Although Senkut and other Googlaires wouldn't disclose the size of their initial grant, a tally of disclosures made in documents filed by Google to the Securities and Exchange Commission shows that Google has granted more than 25 million option shares to its employees, which now number nearly 16,000 in all, since 2003.
The shares vest over four years, with 25% vesting the first year and the rest in monthly increments over the remaining three years. Several batches of grants — one administered in 1998, the other in 2002 — have fully vested. A batch doled out in 2004 is vesting next spring. The exercise prices for all the batches range from 30 cents to $35 — just a fraction of the $444.49 exercise price on options granted last year.
As a result, early Googlers like Senkut — who joined the company in 1999 — got the sweetest packages. In addition to miniscule exercise prices, the grants contained a hefty number of shares. In 2003, the first year for which public data exists, Googlers received on average 11,000 shares each. Last year, employees received on average 320 shares each because Google's stock price had raced into the stratosphere.
If a Googler hung on to all of his or her 2003 shares, they would now be worth a total of $7.8 million based on Friday's closing price of $711.25. Unfortunately for Googlers hired this year, it will be virtually impossible for their options to replicate the percentage gains of the past, experts said.
Many of the search king's multimillionaires — and billionaires — can be found in its executive ranks. Founders Sergey Brin and Larry Page have so far cashed in more than $2 billion of their Google shares, and they still hold billions more. Chief Executive Eric Schmidt and Senior Vice President Omid Kordestani have each sold over $1 billion worth of shares. Chief Financial Officer George Reyes and Senior Vice Presidents Jonathan Rosenberg and David Drummond have liquidated more than $200 million each.
There's no way to know the exact number of Googlaires milling about. The company had several stock splits prior to the IPO, and employees often receive additional options later. (Since going public, however, Google's shares have never split and the company is determined to keep it that way to deter short-term buying and selling.)
In the past two years, an estimated 100 to 200 Googlers — many of whom are Googlaires — decided to take their options money and run. Some are retired and living large in Silicon Valley mini-mansions, but most are continuing to work hard. They've moved to other companies, started their own businesses, invested in start-ups and founded charitable organizations.
So far Senkut has invested in 32 start-ups, pitching in between $25,000 to $100,000 a pop. He and his wife also donate to the University of California, San Francisco, for its research in anti-aging treatments and cancer diagnostics.
More restless Googlers are expected to depart next year after another batch of options vest. "Getting smart, entrepreneurial people on board and making them rich, these individuals hit a point," and they decide to go elsewhere, said Dan Daugherty, a Googler from 2002 to 2006, who cashed out to start a company in Colorado. "In the next year or two, you'll see more people leaving."
More — but not droves. Ex-Googler David Friedberg, who founded his own company last year, estimates that Google's turnover rate will be 2% to 5% annually — much smaller than the 5% to 10% average in corporate America.
Not every Googlaire has gone on a spending spree. Kevin Scott is still renting in San Jose despite making "millions, but not huge millions, under $10 million" from his options. Scott, a senior engineering manager at Google from 2003 to July 2007, said he's waiting for housing prices to come down to get the best deal. "Having a mega-mansion or mini-mansion," he says, "isn't what my wife and I care about."