Google Insiders Get Paid

The financial press loves stories about insider stock activity. First, a surge in selling can be a sign that companies see, at best, an overvalued stock or, at worst, trouble ahead. Second, people read stories that connect big names with big numbers, and let's face it, that's about as close to fame and fortune as some of us are ever going to get.

The fact that 13 Google(GOOG Quote) insiders have, since the company's IPO, sold off nearly $3 billion of shares without much notice is evidence that the former factor isn't in play. Google insiders are disposing of their stock responsibly, using the automatic sales method intended to avoid cashing in ahead of bad news.

Then there are the numbers themselves, which add up to a great mass of Googly Moogly.

According to Thomson Financial, Google's insiders sold 14.6 million shares worth $2.97 billion since its August 2004 IPO through Aug. 31, 2005, at an average of roughly $204 a share. For a year's work, $3 billion isn't bad at all. But as Google CEO Eric Schmidt likes to say, the company is only getting started.

So, let's say the automatic selling, which has averaged 1.4 million shares a month over the past seven months, holds that pace. And let's say Google's stock continues to trade around $300 for the next year. In that case, Google insiders would be selling another $5 billion in the coming year through its orderly insider selling.

If you're among the people who have only five digits to your annual income, it might help to have some context for that $3 billion. It's only 1/27th of Google's current market cap. But it's 1.5 times the amount Barry Diller paid for search rival Ask Jeeves and nearly as much as the total revenue at Yahoo!(YHOO Quote) last year.