Google amends options plans

The Miami Herald reports:

Google has modified its stock-option plans to protect executives and employees from tens of millions of dollars in potential taxes and penalties that loom under proposed IRS rule changes.

The Internal Revenue Service's new rules, due to take effect in 2007, are designed to ensure that companies and their employees pay appropriate taxes on stock options and some types of deferred compensation, such as bonuses. The rules could trigger taxes and penalties on options issued in the past but are still sitting in desk drawers unexercised.

It's impossible to calculate precisely how much money is at stake because there's no firm data tracking how many Google options are subject to the new rules. But the taxes, a new 20 percent penalty and interest charges are likely to be massive at the Mountain View company because its stock price has rocketed so high, so fast -- rising in value from pennies when the company was private to more than $400 today.