Google Chief Sells at the Right Time

Eric Schmidt unloaded more than 100,000 shares in the week before the earnings blowup.
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Google

(GOOG) - Get Report

Chief Executive Eric Schmidt might want to hit Vegas soon, the way his luck has been going.

The veteran technology executive sold more than 56,000 shares Monday, a day before the company floored Wall Street with an earnings disappointment. Schmidt made the sales as part of a preset plan filed with the

Securities and Exchange Commission

. The sales fetched around $426 a share, some $25 above recent trading in the stock.

The sales, which represent a tiny fraction of Schmidt's stake, reaped about $24 million. He also sold about 61,000 shares on Jan. 26, according to filings with the

Securities and Exchange Commission

. Bloomberg data show Schmidt as the third-biggest owner of Class B Google shares, which each have the voting power of 10 common shares, behind company co-founders Larry Page and Sergey Brin.

Schmidt and other top tech executives, including

Microsoft's

(MSFT) - Get Report

Bill Gates and

Oracle's

(ORCL) - Get Report

Larry Ellison, have sold shares on preset schedules called 10b5-1 plans. Page and Brin sell shares in the same manner.

"Because it's pre-established, the concept is that it should insulate you from liability if on or near the day you trade the stock is down for some reason," says executive compensation expert Brian Foley. "These guys fund themselves off regular stock sales."

Schmidt, Page and Brin each will receive $1 in salary for 2006, unchanged from last year. They announced their stock-sale plans when the company went public in 2004. Page and Brin each made more than a billion dollars last year selling the shares, while Schmidt reeled in some $345 million.

Brin and Page, who are ranked 16th on

Forbes'

list of the 400 richest Americans, recruited Schmidt from

Novell

(NOVL)

in 1997. He also is a former chief technology officer at

Sun Microsystems

(SUNW) - Get Report

.

If Schmidt's timing was lucky, many other Google investors were not so fortunate. Shares in the Mountain View, Calif., company dropped 7% Wednesday after a 22-cent earnings miss late Tuesday. Still, anyone who bought Google at any time before November is still in the money at recent levels. Google rose 8 cents Thursday to $401.86.

Most Wall Street analysts continue to defend the stock, arguing that the earnings miss was solely because of an unexpectedly high tax rate. Some investors seem to think, though, that Google -- which has more than quadrupled since its August 2004 initial public offering -- may be too much of a gamble.