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Google's Cash Bomb vs. Facebook IPO

NEW YORK ( TheStreet) -- Google's (GOOG - Get Report) across-the-board 10% bonus and $1,000 holiday gift to employees suggests the company is doing well and that it wants to fight the flow of employees to rivals like Facebook.

The Mountain View, Calif., Net search giant, according to a memo published by Business Insider's Henry Blodget, has told employees that it was adjusting its bonus mix by bumping up the cash portion and presumably reducing the stock awards.
 Eric Schmidt
Google CEO Eric Schmidt

The move comes as Google's growth is taking off again, which the company's blowout third-quarter results showed. It also comes as outfits like Facebook and Twitter are rapidly expanding and, in all likelihood, headed for a lucrative, employee-enriching IPO.

Google shares are up 13% this year. That's a respectable gain, but far from the red-hot increases a few years ago that helped make so many stock-rich Google millionaires.

So, in response, Google dropped a cash bomb on all its good people.

With 23,331 employees as of September and assuming an average salary of $100,000, the new bonus plan will cost Google $256,641,000 next year, including the $1,000 holiday gifts.

To put that number in perspective, it's 1% of Google's estimated revenue for 2011.

The bigger question is whether Google employees prefer cash in the bank over pre-IPO stock options. Not a bad position to find yourself in in this economy.

--Written by Scott Moritz in New York.

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